Japan's business sentiment improved in the third quarter, indicating the potential for a sustained economic recovery
Non-manufacturers in Japan experienced a significant improvement in their mood, reaching levels not seen since 1991
This suggests that retailers benefited from increased consumption after the easing of pandemic restrictions
Companies in Japan maintained strong spending plans and faced a tight labor market, raising the possibility of the Bank of Japan scaling back its massive stimulus efforts
The confidence index for big manufacturers in Japan rose to 9 in September, exceeding expectations and marking the second consecutive quarter of improvement
The index for big non-manufacturers stood at 27, also surpassing market forecasts and improving for the sixth consecutive quarter. This was the highest reading since November 1991
Many large companies reported being able to pass on higher costs to consumers, which contributed to the improved business sentiment
A rebound in auto production and falling raw material costs played a role in boosting sentiment, although some smaller firms struggled to raise prices
Large firms in Japan plan to increase capital expenditure by 13.6% in the fiscal year ending in March 2024, matching market estimates
The survey indicated that wages could continue to rise, with the labor market being the tightest since 2019 for big manufacturers and since 1992 for non-manufacturers
While the domestic-demand led growth in Japan appears promising, concerns remain about the global outlook, particularly the state of the U.S. economy and signs of weakness in China's economy