BOJ March 2023 Tankan Survey

◆The results of the BOJ March 2023 Tankan survey of corporate sentiment were as follows: business conditions DI (actual result) for large manufacturers were at +1%pt (-6%pt in comparison with the previous survey), while large non-manufacturers were at +20%pt (+1%pt in comparison with the previous survey). Looking at the breakdown of large manufacturers, the materials industries found their earnings especially under downward pressure due to rising input costs. As for the large non-manufacturing industries, business conditions improved for retail and related industries due to the pickup in personal consumption brought on by the decrease in new infections of COVID-19, and the recovery of inbound consumption accompanying the relaxing of border control measures.

◆Looking at the difference between output price DI (actual result) and input price DI (actual result), both large manufacturers and large non-manufacturers improved. It appears that non-manufacturing in particular is progressing of late in price pass-through in response to the rapid cost increases it has experienced. As for the forecast, both major manufacturers and major non-manufacturers expect continued improvements, and price pass-through is expected to continue even after the input price DI begins to decline.

◆The FY2023 capex projection for all enterprises in all industries (including investment in properties, but not investment in software or research & development) is +3.9% y/y. Looking at the projection by industry for enterprises of all sizes, manufacturers were at +6.3%, with non-manufacturers at +2.4%. Expectations for progress in the normalization of economic activity continue to boost corporate willingness to invest in capex.