Japan Reuters Tankan Index

Japan's manufacturers' sentiment improved for the second consecutive month, with the Reuters Tankan index rising to +3 in February 2025, up from +2 in January. The food and chemicals sectors led the growth, showing the strongest results. However, some industries, including paper, pulp, and steel, experienced a decline in sentiment in February. A manager commented, "The yen's depreciation has paused, and while material costs have surged, selling prices have only slightly increased." Other respondents pointed to rising labor and operational costs, which are putting pressure on profit margins. There were also concerns about the impact of US President Donald Trump’s broad plans to raise tariffs. Looking ahead, the sentiment index is expected to rise further to +5 in May 2025, signaling continued optimism for Japan's manufacturing sector.