Japan Business Survey Index Large Manufacturing Firms2022 Data - 2023 Forecast

The business survey index of large manufacturing firms in Japan fell to -10.5% in the first quarter of 2023 from -3.6% in the previous quarter, as higher import costs and raw materials prices that squeezed corporate margins, as well as global economic uncertainties continued to weigh on business sentiment. The latest figure was also the lowest reading since the second quarter of 2020. The business survey index measures the percentage of firms that expect the business environment to improve from the previous quarter minus the percentage that expect it to worsen. Looking ahead, large Japanese manufacturing firms expect business conditions to improve in the coming months, with an outlook of -0.7% in the second quarter and a further increase to 6% in the third quarter.

The business survey index of large manufacturing firms in Japan posted at -3.6% in the fourth quarter of 2022, reversing from a 1.7% rise in the third quarter as elevated raw materials prices continued to pressure corporate margins, while global economic uncertainties weighed on sentiment. Latest data showed that producer prices in the country surged 9.3% in November 2022 from a year ago, slowing from a revised 9.4% gain in October but exceeding expectations for a slight slowdown to 8.9%. Meanwhile, renewed fears of a global recession clouded the outlook, with central banks in major economies set to tighten policy further. The business survey index measures the percentage of firms that expect the business environment to improve from the previous quarter minus the percentage that expect it to worsen.

The business survey index of large manufacturing firms in Japan increased 1.7% in the third quarter of 2022, turning positive for the first time in three quarters as sharp declines in energy and other raw materials prices during the period helped ease tight corporate margins. Latest data showed producer prices in the country rose 9% in August 2022 from a year earlier, increasing at the same rate in July which was also the softest pace since December last year. Meanwhile, a weakening yen continued to pressure manufacturing firms by pushing up import costs, as Japan’s heavy reliance on foreign fuel and other commodities makes its economy vulnerable to currency volatility, as well as global supply issues and inflationary shocks. The business survey index measures the percentage of firms that expect the business environment to improve from the previous quarter minus the percentage that expect it to worsen.