FX.co ★ Japan’s Small Firms Slash Capex as Tankan Gauge Plunges to -8.1% in Q1 2026

Japan’s small businesses sharply pulled back on investment at the start of 2026, with the Tankan All Small Industry CAPEX indicator dropping to -8.1% in the first quarter, from 0.1% in the previous period. The latest reading, updated on 31 March 2026, marks a decisive reversal from the marginally positive figure recorded in the fourth quarter of 2025.

The move from a near-flat 0.1% in Q4 2025 to a steep -8.1% in Q1 2026 suggests a significant cooling in capital spending plans among smaller firms across Japan’s industries. While the data do not specify the underlying drivers, the swing into negative territory highlights mounting caution in expansion and equipment investment at the smaller end of the corporate sector.

For policymakers and markets, the deterioration in small-industry capex intentions raises concerns about the strength and breadth of Japan’s investment cycle. With small companies playing a key role in employment and domestic demand, the sharp decline in planned capital expenditure could weigh on growth expectations if the trend persists into subsequent quarters.