Japan: SME future expectations recover in June

Research evidence excerpt

Japan: SME future expectations recover in June

J P M O R G A N Japan Economic Research

08 July 2026

Japan: SME future expectations

recover in June

Economic and Policy Research

Takuho Morimoto

(81-3) 6736-6682

takuho.morimoto@jpmorgan.com

JPMorgan Securities Japan Co., Ltd.

In the June Economy Watchers Survey, sentiment among small and medium-sized

enterprises (SMEs) regarding current conditions rose 0.4 points to 44.0. Relative

to other business surveys, SME sentiment remains depressed after the energy price

shock, with the index still 4.9pts below its February level. Even so, worries about

the drag from the shock continue to fade, and the 2–3 months-ahead outlook index

climbed 5.0pts to 45.7 in June. Alongside solid activity data, the improvement in

SME sentiment supports our view that growth will remain above potential this

year.

The household activity-related index remains soft, slipping 0.3ps to 43.5, likely

reflecting weak consumer confidence. Sector details were mixed. The services

sector index rose 2.1pts to 46.4, with respondents citing firmer demand for

discretionary spending; one also highlighted the positive impact of rising equity

prices. By contrast, the food and retail sector indices fell 2.7pts and 1.6 pts,

respectively, partly reversing the prior month’s gains. Many respondents expressed

concern that higher prices could weigh on demand. The outlook indices improved

broadly, with the total index rising 4.8pts to 45.7, partly reflecting expectations for

supply normalizations. Separately, some respondents pointed to strong sales of

autos and home appliances and expect the momentum to continue. While

sentiment remains subdued, we expect actual spending to stay solid. Following

yesterday’s strong May CPI, we have raised our 2Q real GDP tracking estimate to