Confidence among Japanese manufacturers rose faster than expected in Q4 

Sentiment has been rising since the second quarter of the year.

Business sentiment among major manufacturers in Japan continued to beat market expectations after improving for three consecutive quarters during the December round of the closely watched “tankan” survey. 

The headline tankan large manufacturing firm index rose to plus 12 in the fourth quarter from plus 9 in the third quarter, data from the Bank of Japan on Wednesday showed. 

The latest showing signalled that big companies this quarter were at their most optimistic they have ever been in nearly two years, or since the first quarter of 2022 when the index was at plus 14.

While improvements in the December survey proved to be faster than initially expected, the pace of recovery will likely slow down in the first quarter with the index projected to fall to plus 8. 

READ MORE: Japan’s major manufacturers show greater optimism in Q3

Business sentiment among medium-sized manufacturers also improved to plus 5 this quarter from plus 2 in the third quarter, while smaller companies turned optimistic (plus 1) this quarter from last quarter (minus 5).

A reading above 0 indicates improving sentiment while levels below that signals worsening conditions

Despite improving sentiments, major Japanese manufacturers maintained a gloomy outlook on the labour market.