BOJ March 2024 Tankan Survey

◆The results of the BOJ March 2024 Tankan survey of corporate sentiment were as follows: business conditions DI (actual result) for large manufacturers were at +11%pt (-2%pt in comparison with the previous survey), while large non-manufacturers were at +34%pt (+2%pt in comparison with the previous survey).

◆Looking at the breakdown of large manufacturers, motor vehicles experienced a major decline in business conditions DI (actual result) (-15%pt in comparison with the previous survey). This was due to a significant downturn in production and sales volume for motor vehicles due to the halt of operations at some motor vehicle factories. As for large non-manufacturers, business conditions DI (actual result) achieved growth in transport and postal activities (+8%pt). This is thought to have been due to growth in usage of railroad transportation with the increase in inbound demand. In addition, business conditions DI (actual result) grew in services for businesses (+7%pt), and real estate (+6% pt).

◆Looking at the difference between output price DI (actual result) and input price DI (actual result), both large manufacturers and large non-manufacturers worsened. As for the forecast, non-manufacturers expect a slight improvement, but manufacturers expect to mark time. Price pass-through for large enterprises in response to the rapid increase in costs is moving toward completion of its cycle. On the other hand, small enterprises, are moving towards improvement in the difference between output price DI (actual result) and input price DI (actual result). In comparison to large enterprises, the increasing sense of labor shortage amongst small enterprises is remarkable. Movement towards price pass-through as manifested in sales prices amongst small enterprises to cover wage increases as a means of handling the labor shortage may be on the increase.