The business survey index of large manufacturing firms in Japan jumped to 5.4% in the third quarter (Q3) of 2023 from -0.4% in the second quarter, the highest reading since the last quarter of 2021 as business conditions improved dramatically for the sector. Still, manufacturing firms remained cautious about higher import costs and raw materials prices that squeezed corporate margins, as well as heightened global economic uncertainties. The business survey index measures the percentage of firms that expect the business environment to improve from the previous quarter minus the percentage that expect it to worsen. Looking ahead, large Japanese manufacturing firms expect continued improvement in business conditions in the coming months, with an outlook of 8.8% in the fourth quarter and a stabilization to 6.2% in the first quarter of next year.
