Japan’s Manufacturing Confidence Hits Four-Year High as Yen Weakness Fuels Exports

Japan’s manufacturing confidence surged to its highest level in nearly four years in November, according to the latest Reuters Tankan poll. The survey, which mirrors the Bank of Japan’s key business sentiment index, revealed that the manufacturers’ confidence index climbed to +17, up from +8 in October — the strongest reading since January 2022. The recovery was primarily driven by robust performances in the electronics and automobile industries, both benefiting from a weaker yen and steady demand.

The electronics sector showed exceptional strength, with its subindex soaring to +25, its best level since December 2021, compared to +5 a month earlier. “The weak yen is giving exports a tailwind,” a manager at an electronics firm noted. The yen depreciated over 5% during the October 28–November 7 survey period, trading around 154.50 per dollar. Another manager highlighted strong momentum in the semiconductor market, particularly for memory chips, which continues to bolster Japan’s high-tech exports.

The auto and transport machinery sector also saw remarkable gains, with its index jumping to +27 from +9, as manufacturers benefited from export competitiveness and stable customer orders. However, the outlook remains cautious, with the overall manufacturers’ index expected to ease to +15 by February. Concerns persist over slowing auto production and weaker sales, especially after Honda reduced its full-year sales forecast by 8% to 3.34 million vehicles due to chip shortages, while Nissan also cut domestic output amid soft demand.

Non-manufacturers, supported by Japan’s strong tourism recovery, maintained a steady sentiment index at +27, with the same optimism projected through February. Despite lingering global trade uncertainties and tariff tensions, Japan’s industrial rebound signals renewed confidence in its export-driven economy.