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Japan manufacturers' mood hits more than 5-year high on chip demand: Reuters poll

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In short

The Reuters Tankan sentiment index for manufacturers reached plus-27 in November, marking its best performance since August 2021, while non-manufacturers touched a high not seen since June 2018. Gains in the electronics segment were particularly pronounced, climbing fourteen points due to robust demand for semiconductor memory products. Non-manufacturing growth was bolstered by the services index surging to plus-43 on strong personnel demand. Despite expectations for industrial sentiment to edge up to plus-28 by February, higher financing costs and persistent inflation present lingering challenges.

Key points

  • Expanding semiconductor requirements are playing a central role in elevating Japanese ind…: Expanding semiconductor requirements are playing a central role in elevating Japanese industrial confidence to multi-year peaks.
  • Non-manufacturing businesses anticipate a sentiment moderation down to plus-29 by Februar…: Non-manufacturing businesses anticipate a sentiment moderation down to plus-29 by February after a notable surge.
  • Persistent inflationary pressures and elevated interest rates continue to challenge corpo…: Persistent inflationary pressures and elevated interest rates continue to challenge corporate ability to pass on expenses.

Sources checked by our analysis pipeline: 1

TOKYO, Nov 11 : Japanese manufacturers' sentiment rose to its strongest level in more than five years in November as booming semiconductor demand underpinned broad-based optimism, while the non-manufacturers' mood hit its highest in over eight years, a Reuters monthly poll showed.

The Reuters Tankan sentiment index for manufacturers rose to plus-27 in November, the highest reading since August 2021, from plus-22 in October.

The poll, a leading indicator of the Bank of Japan's quarterly Tankan business survey, was conducted from October 27 to November 6 and received responses from 214 of 508 firms. The indexes are calculated by subtracting the percentage of pessimistic responses from optimistic ones, with positive figures indicating net optimism.

The improvement in manufacturers' confidence was led by the electronics sector, where sentiment jumped to plus-39 in November from plus-25.

"Semiconductor demand, particularly for memory, is very strong," a manager at an electronics machinery company said.

Sentiment in the precision machinery sector, which includes some chip-related equipment makers, also improved to plus-42 from plus-38.

"Orders from both domestic and international remain robust," said a manager at…

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