Japan Business Survey Index Large Manufacturing Firms2022 Data - 2023 Forecast

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.

The business survey index of large manufacturing firms in Japan decreased 9.9% in the second quarter of 2022, deteriorating further after posting a 7.6% decline in the previous quarter, as high input costs continued to squeeze corporate margins. Latest data showed producer prices in the country jumped 9.1% in May from a year ago, slowing from the previous month but remaining near record highs as the Ukraine crisis and a weak yen pushed up the cost of energy and raw materials. Japan’s heavy reliance on imports for fuel and other commodities makes its economy vulnerable to 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.