Weak Yen Lifts Japan’s Factory Sentiment to Highest Since Early 2022
Japan’s industrial outlook brightened in November as a softer yen improved export competitiveness and global demand for autos and electronics strengthened. The latest monthly business survey shows confidence surging across key manufacturing sectors, while services continue to benefit from resilient tourism and domestic spending.
The headline manufacturers’ sentiment index climbed to +17 in November, up from +8 in October and the strongest reading since early 2022. Electronics led the improvement, with their sub-index jumping to +25 from +5 on better chip-related orders and improved price competitiveness abroad. The auto and transport machinery sector also rebounded sharply to +27 from +9, supported by stable orders and the currency tailwind.
Executives cautioned, however, that lingering supply-chain disruptions and softer sales could temper momentum into early next year. The overall manufacturing index is projected to ease to +15 by February as weaker output at major automakers, including Honda and Nissan, ripples through the supply base. Additional uncertainty stems from new U.S. tariff measures and escalating trade tensions with China, which could weigh on Japan’s export outlook.
Outside the factory floor, non-manufacturing sentiment held steady at +27, buoyed by strong tourism flows and solid service-sector demand. The outlook through February remains stable, pointing to ongoing support from hospitality, travel, and domestic consumption.
Key Points – Manufacturers’ index rose to +17 in November from +8, the highest since early 2022. – Electronics sentiment surged to +25 on improved chip orders and a weaker yen. – Auto and transport machinery rebounded to +27, aided by steady orders and export competitiveness. – Outlook sees the manufacturing index easing to +15 by February amid supply and demand headwinds. – Business leaders flagged tariff risks and China-related trade frictions as key uncertainties. – Non-manufacturing sentiment stayed at +27, supported by tourism and domestic services demand.
