BOJ December 2023 Tankan Survey

◆The results of the BOJ December 2023 Tankan survey of corporate sentiment were as follows: business conditions DI (actual result) for large manufacturers were at +12%pt (+3%pt in comparison with the previous survey), while large non-manufacturers were at +30%pt (+3%pt in comparison with the previous survey).

◆Looking at the breakdown of large manufacturers, processed metals (+17%pt in comparison with the previous survey) and nonferrous metals (+15%pt in comparison with the previous survey) saw a significant rise in business conditions DI (actual result). This may have been due to the ripple effect from recovery production in motor vehicles (+13%pt in comparison with the previous survey) on related industries. As for large non-manufacturers, business conditions DI (actual result) achieved growth in real estate (+10%pt in comparison with the previous survey) and communications (+9%pt in comparison with the previous survey). In addition, progress in normalization of domestic economic activity and the increase in inbound consumption boosted business conditions DI (actual result) in accommodations, eating & drinking services (+7%pt in comparison with the previous survey), services for individuals (+4%pt in comparison with the previous survey), and retailing (+2% pt in comparison with the previous survey).

◆Looking at the difference between output price DI (actual result) and input price DI (actual result), large manufacturers worsened, while large non-manufacturers improved. As for the forecast, both manufacturing and non-manufacturing are expected to worsen. Price pass-through for large enterprises in response to the rapid increase in costs is moving toward completion of its cycle. As for small manufacturers and non-manufacturers, difference between output price DI and input price DI is improving for both actual and forecast results. In comparison to large enterprises, the increasing sense of shortage of employment amongst small enterprises is remarkable. Movement towards price pass-through as manifested in sales prices to cover wage increases as a means of handling the labor shortage may be on the increase especially amongst small enterprises.