FX.co ★ Japan Manufacturers’ Mood Hits Over 4-Year High

The Reuters Tankan index for Japanese manufacturers rose to +18 in March 2026 from +13 in February, its highest reading since December 2021. The near-term rebound in industrial activity was underpinned by strong semiconductor-related demand and a broad-based pickup across major manufacturing sectors. The improvement was particularly pronounced in chemicals and petroleum-related industries, where sentiment climbed sharply on the back of stronger demand tied to the semiconductor cycle. Transport machinery—one of the main pillars of Japan’s export sector—also remained solid, supported by robust vehicle production and healthy order books. By contrast, sentiment in the steel and non-ferrous metals segment stayed deeply negative, reflecting weak demand from the auto industry. Looking ahead, manufacturers expect sentiment to soften to +14 by June, as uncertainty stemming from the Middle East conflict, persistently high input costs, and external demand risks weighs on the outlook.