FX.co ★ Japan Business Sentiment Rises to 3-Quarter High in Q3

The Business Survey Index (BSI) for Japan's large manufacturing firms witnessed an unexpected ascent, reaching 3.8% in the third quarter of 2025, a significant jump from the -4.8% registered in the previous quarter, marking the lowest level since the first quarter of 2024. This improvement far surpassed market forecasts, which had anticipated a rise to just 3.3%. This quarter's figure represents the highest since the final quarter of 2024 and indicates a return to positive figures after three quarters of negativity. The upswing is attributed primarily to a significant rebound in exports, with companies accelerating their shipments to the United States ahead of the recently enforced 15% comprehensive tariffs. This development follows an executive order signed by U.S. President Donald Trump last week, formalizing a trade agreement with Japan and imposing a 15% baseline tariff on a wide range of Japanese goods, including automobiles. The BSI, which is derived from surveys conducted with major Japanese manufacturers, serves as a critical indicator of economic vitality in a nation that highly depends on industrial production. Looking forward, manufacturers maintain an optimistic outlook, predicting a further increase to 3.9% in the fourth quarter, with a slight decrease to 3.3% anticipated in the first quarter of 2026.