{"id":439575,"date":"2026-10-07T06:07:20","date_gmt":"2026-10-06T23:07:20","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/japan-factory-mood-hits-near-five-year-high-as-services-sentiment-drops-six-points-439575\/"},"modified":"2026-10-07T06:07:20","modified_gmt":"2026-10-06T23:07:20","slug":"japan-factory-mood-hits-near-five-year-high-as-services-sentiment-drops-six-points","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/japan-factory-mood-hits-near-five-year-high-as-services-sentiment-drops-six-points-439575\/","title":{"rendered":"Japan factory mood hits near five-year high as services sentiment drops six points"},"content":{"rendered":"<div>\n<p dir=\"ltr\">The split matters for the Bank of Japan. Strength in manufacturing supports the case that the economy can absorb further rate increases, but respondents in property and services directly cited higher interest rates and weaker household spending as drags. That mix fits the gradual, no-pre-set-pace approach board member Ayano Sato outlined this week rather than any acceleration. Cost pressure remains a theme, with food producers hit hardest by raw-material prices, and the Middle East energy shock is likely to keep that pressure on while oil stays elevated. For equities, the survey reinforces the chip-equipment and machinery trade, while domestically focused retail, food and property names look more exposed.<\/p>\n<p dir=\"ltr\">&#8212;<\/p>\n<p dir=\"ltr\">Earlier:<\/p>\n<ul>\n<li><a href=\"https:\/\/investinglive.com\/central-banks\/japan-media-reports-boj-s-sato-one-of-two-september-dissenters-backs-gradual-rate-hikes\" target=\"_blank\" rel=\"follow\">Japan media reports: BOJ&#8217;s Sato, one of two September dissenters, backs gradual rate hikes<\/a><\/li>\n<\/ul>\n<p dir=\"ltr\">\n<p dir=\"ltr\">&#8212;<\/p>\n<p dir=\"ltr\">Japan&#8217;s chipmakers and machinery firms have rarely felt better, but the service sector is starting to feel the bite of higher rates, rising costs and stretched household budgets.<\/p>\n<p dir=\"ltr\">Summary:<\/p>\n<ul dir=\"ltr\">\n<li>The Reuters Tankan manufacturers index rose to +22 in October from +21, the highest since December 2021<\/li>\n<li>Precision machinery, including chip equipment makers, jumped nine points to +38, with one firm reporting orders running well above normal for four months<\/li>\n<li>The non-manufacturers index fell to +23 from +29, its lowest since November 2024<\/li>\n<li>Food producers dropped 15 points to minus 40, while retailers and information and communications firms both fell to +8<\/li>\n<li>Manufacturers expect a modest improvement to +23 in three months, while non-manufacturers see a further slip to +21<\/li>\n<\/ul>\n<p dir=\"ltr\">\n<p dir=\"ltr\">Confidence among large Japanese manufacturers rose in October to its highest level in almost five years on strong semiconductor demand, but sentiment in the service sector deteriorated sharply as rising costs, higher interest rates and softer household spending took a toll, a Reuters poll showed.<\/p>\n<p dir=\"ltr\">The Reuters Tankan index for manufacturers edged up to +22 from +21 in September, a level last seen in December 2021. The precision machinery sector, which includes some makers of chip-related equipment, led the gains with a nine-point rise to +38. One respondent in the sector said semiconductor orders had been running at about one and a half times normal levels for four months, while another machinery firm reported strong orders and shipments for chip-related products. Metal products also climbed nine points to +35, and the steel and nonferrous metals sector swung to +25 from minus 13.<\/p>\n<p dir=\"ltr\">The picture outside manufacturing was much weaker. The non-manufacturers index fell to +23 from +29, its lowest reading since November 2024. Food producers suffered the steepest decline, falling 15 points to minus 40 as higher raw-material costs and weak consumer demand eroded profits. Information and communications firms dropped to +8 from +21, retailers fell to +8 from +18, and real estate and construction slipped to +28 from +37. Respondents cited higher interest rates, rising construction costs and weaker household spending, with one property company manager saying investment had become harder as borrowing and building costs climbed.<\/p>\n<p dir=\"ltr\">Wholesalers were the exception, rising to +30 from +24 on stronger demand for construction materials tied to disaster-recovery work.<\/p>\n<p dir=\"ltr\">Looking ahead three months, manufacturers expect a modest improvement to +23, while non-manufacturers see their index easing further to +21. Several manufacturers cautioned that AI-related demand could eventually cool, and service firms said inflation was eroding household purchasing power.<\/p>\n<p dir=\"ltr\">The indexes are calculated by subtracting the share of pessimistic responses from optimistic ones. The survey, a leading indicator for the Bank of Japan&#8217;s quarterly Tankan, was conducted from 18 September to 2 October, with just over 200 of around 500 firms responding.<\/p>\n<p dir=\"ltr\">The results land as the central bank weighs the pace of further tightening after raising its policy rate to 1.25% in September. A widening gap between export-driven manufacturers and domestically focused services is likely to reinforce calls for a gradual approach.<\/p>\n<p dir=\"ltr\">&#8212;<\/p>\n<p dir=\"ltr\">\n<p>                            This article was written by Eamonn Sheridan at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The split matters for the Bank of Japan. Strength in manufacturing supports the case that the economy can absorb further rate increases, but respondents in property and services directly cited higher interest&hellip;<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-439575","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/439575","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=439575"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/439575\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=439575"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=439575"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=439575"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}