BOJ March 2022 Tankan Survey

◆The results of the BOJ March 2022 Tankan survey of corporate sentiment were as follows: business conditions DI (actual result) for large manufacturers were at +14%pt (-3%pt in comparison with the previous survey), while large non-manufacturers were at +9%pt (-1%pt in comparison with the previous survey). Business conditions DI (actual result) for large manufacturers declined due mostly to the deterioration of the earnings environment as a result of the high price of commodity. Meanwhile, business conditions DI (actual result) for large non-manufacturers worsened due to the spread of COVID-19 and the implementation of Special Stricter Measures, which held down domestic economic activities.

◆Business conditions DI (forecast) for large manufacturers was at +9%pt (-5%pt) in comparison with the current survey), while large non-manufacturers were at +7%pt (-2%pt). While there are positive influences such as the resumption of economic activity and the mitigation of supply constraints, these appear to have been counterbalanced by the negative influence of rising tensions associated with the Ukraine situation.

◆The FY2022 capex projection for all enterprises in all industries (incl. investment in properties, but not investment in software or research & development) is +0.8% y/y. Looking at the projection by industry, manufacturers overall was at +9.0%, with non-manufacturers (all enterprises) at -4.0%. A high growth rate was seen in manufacturers for the March survey, with high growth seen in software investment for both manufacturers and non-manufacturers (all enterprises). Growth is seen in capex projections associated with digitalization and “greening”.