In a recent report on November 12, 2025, the confidence of Japanese manufacturing companies has significantly increased, reaching its highest level in nearly four years. This surge in confidence can be attributed to the depreciation of the Japanese yen, which has boosted export competitiveness, coupled with stable demand in the electronics and automotive industries, lifting the overall economic outlook.
According to a survey released by Reuters in November, the manufacturing industry’s business sentiment index rose from a positive 8 in October to a positive 17 in November, marking a new high since January 2022. The survey, based on the framework of the Bank of Japan’s quarterly Tankan survey, is considered a leading indicator of business confidence and policy trends.
The electronics sector has shown particularly strong performance, with its sub-index jumping from a positive 5 last month to a positive 25 in November, the highest since December 2021. Companies interviewed mentioned that the “weakened yen has brought favorable conditions for exports,” and some also highlighted the “strong demand for semiconductor, especially memory chips.”
During the survey period from October 28 to November 7, the yen depreciated by over 5% against the US dollar, hovering around 154.5 yen to 1 US dollar, further enhancing export competitiveness and overseas earnings.
The automotive and transportation machinery industries have similarly benefited from the depreciation of the yen, with their confidence index rising significantly from a positive 9 to a positive 27. Several companies noted that stable orders supported production and profitability, but some businesses anticipate a potential decline in sentiment early next year. The survey indicates that the overall manufacturing industry’s business sentiment index may drop to a positive 15 in February 2025, mainly due to slowing growth in car sales and production volatility.
Honda has revised down its full-year sales forecast by 8% to 3.34 million vehicles this month, citing production disruptions caused by a shortage of Nexperia semiconductor chips. Additionally, Nissan has adjusted its domestic production expectations under the pressures of brand restructuring and capacity adjustments.
Many manufacturers expressed concerns in the survey regarding the tariff policies of US President Donald Trump, particularly the uncertainties arising from the tense US-China trade relations, making demand prospects difficult to predict.
The non-manufacturing business sentiment index remained at a positive 27, unchanged from the previous month. The boom in tourism continued to fuel the recovery of the food and beverage, retail, and accommodation sectors, with companies remaining optimistic about their outlook for February next year, with the forecast index still at a positive 27.
The Reuters Tankan survey was sent to 495 non-financial enterprises at the end of October to early November, with 222 companies responding. The overall results indicate that the weakened yen and the resurgence in exports have injected vitality into the Japanese manufacturing industry. However, supply bottlenecks in the automotive industry and uncertainties in international trade remain the primary risks in the coming months.