Japan Business Survey Index Large Manufacturing Firms

Japan’s Business Survey Index for large manufacturing firms dropped to -2.4% in the first quarter of 2025, down from 6.3% in the previous quarter. This marks the first negative reading since Q2 of last year and falls short of market expectations for a modest improvement to 6.5%. The latest reading came as persistent inflationary pressures and solid economic growth pushed the Bank of Japan to raise interest rates further. Additionally, Japanese manufacturers are grappling with an escalating global trade war, as U.S. President Donald Trump imposed tariffs on key trading partners, including Mexico, Canada, and China. The BSI measures the difference between the percentage of firms expecting improved business conditions and those anticipating deterioration. Despite the recent downturn, large Japanese manufacturers expect conditions to stabilize, forecasting an index of -0.5% in the next quarter and a rebound to 6.3% thereafter.