Business sentiment improves in Tankan survey

Major Japanese manufacturers showed their highest business optimism in more than four years, despite the uncertainties brought by the Iran war.

According to the Bank of Japan’s quarterly Tankan surveyA closely watched survey measuring business sentiment among domestic companies.

The trade optimism index among major Japanese manufacturers rose to 17 in the first quarter of 2026, from 15 in the previous quarter, according to survey results published on April 1. What economists expect According to Reuters poll.

A positive figure in Tankan indicates that optimists outnumber pessimists and vice versa.

This figure was at its highest level since the fourth quarter of 2021, according to LSEG data.

This was achieved thanks to “solid profits” that offset the pressure of higher energy costs, according to an email to CNBC from Carlos Casanova, senior Asia economist at Swiss private bank UBP.

Business confidence for non-major manufacturers remained at 36, the highest level in recent years, according to LSEG data. last quarter’s revised 36. This also beat the 33 expectations of a Reuters poll.

Nikkei 225 It gained 4.48% on Wednesday after the data was released, on hopes that the Iran war may end soon.

Chief Asia economist Frederic Neumann told CNBC HSBCHe said the rise in business confidence was also due to Japan’s economy seeing accelerated momentum at the beginning of the year, supported by strong exports in January and February.

However, since the survey period ended in March, the positive sentiment may not fully reflect the impact of the Iran war.

“While the survey indicates that the conflict is gaining strong momentum, the outlook for activity in the coming months is becoming increasingly darker, with the Strait of Hormuz remaining closed day after day and week after week, compounded by rising energy costs and supply chain disruptions,” Neumann said. he said.

Neumann highlighted that Tankan was a “somewhat backward-looking” study that did not take into account the uncertainty of the conflict in the Gulf and its impact on energy costs and supply chains.

This view was echoed by Norihiro Yamaguchi, a leading Japanese economist at Oxford Economics. Yamaguchi said in an email to CNBC that “given the survey period, many responses do not fully reflect the escalation of the Iran conflict.”

Therefore, Yamaguchi said he expects higher energy prices to negatively impact institutional confidence by worsening the ratio of a country’s exports to import prices, worsening its terms of trade.

The data came at a time when Japan was grappling with the effects of the Iran war. Release of oil stocks and coming into force fuel subsidies To ward off the worst energy shock from the closed Strait of Hormuz.

More than 87 percent of Japan’s energy needs depend on imports. International Energy Authority.

Reuters reported that A 10% increase in crude oil prices could increase Japan’s consumer inflation rate by as much as 0.3 percent in about a year.