Reuters Tankan - Japan manufacturing sentiment negative for the first time in 10 months

Reuters Tankan report for December 2024, in summary:Manufacturers' Sentiment Turns Negative: December index fell to -1, down from +5 in November, marking the first negative reading in 10 months.Non-Manufacturers' Sentiment Improves: Index rose to +30 in December, up from +19 in November, with further improvement to +32 expected in March.Outlook for Improvement: Manufacturers' sentiment is projected to rebound to +5 in March, while non-manufacturers' sentiment is also expected to improve.Concerns in Manufacturing:Key industries (electronics, steel, metals) reported significant declines in confidence.Fears over U.S. protectionist policies and a prolonged Chinese economic slowdown are driving pessimism.Managers cited delayed investment projects and intensified trade war concerns as key challenges.Service Sector Resilience:Boosted by strong inbound tourism and improved ability to pass costs onto service prices.Transportation firms noted higher profits despite labor shortages.Economic Indicators:Japan’s Q3 GDP growth revised up to 1.2% annualized, driven by smaller declines in capital expenditure.Consumption revised downward, highlighting the fragility of the recovery.Risks to BOJ Forecast: Manufacturers' pessimism could challenge expectations of wage-driven recovery and inflation hitting the 2% target.***Reuters Tankan is a monthly survey that seeks to track the Bank of Japan's tankan quarterly surveyrespondents spoke on the condition of anonymityReuters Tankan indexes are calculated by subtracting the percentage of pessimistic respondents from optimistic ones. A positive reading means optimists outnumber pessimists.***The Bank of Japan meet next week, 18 and 19 December. This article was written by Eamonn Sheridan at www.forexlive.com.