Japan: BoJ Tankan shows strong momentum and higher inflation

Research evidence excerpt

Japan: BoJ Tankan shows strong momentum and higher inflation

J P M O R G A N Japan Economic Research

01 July 2026

Japan: BoJ Tankan shows strong

momentum and higher inflation

The BoJ’s June Tankan survey indicates that the strongest corporate momentum in Economic and Policy Research

decades remains intact. The all-firms business sentiment index was unchanged at Ayako Fujita

18 from March, but that still represents the highest level since mid-1991. Business (81-3) 6736-1172

sentiment is solid in both manufacturing and non-manufacturing. The large non- ayako.fujita@jpmorgan.com

manufacturing DI, which has consistently held at multi-decade highs for several JPMorgan Securities Japan Co., Ltd.

years, edged up further—from 36 in March to 37 this time. Meanwhile, the large

manufacturing DI, which had somewhat lagged non-manufacturing, improved

markedly, rising from 17 previously to 22. While this survey may reflect early

expectations of a ceasefire in the Middle East conflict, the uncertainties that remain

are unlikely to undermine those expectations materially.

By industry, the standout strength within manufacturing is seen in a broad range

of machinery-related industries, shipbuilding, and metals. The results suggest that

manufacturing strength is being supported not only by the broader base of AI-

related investment but also by progress in strategic investment. In non-

manufacturing, consumer-related industries such as retail and accommodation

posted sizable improvements from the previous quarter. In contrast, construction

and real estate—which are likely to be gradually affected by rising interest rates—

softened somewhat from previously very elevated levels. Even so, none of the

industries showed a conspicuous deterioration overall, and improved sentiment