Japan manufacturers' mood hits near 5-year high on semiconductor demand: Reuters poll

Confidence among Japan’s large manufacturers climbed in September to its highest level in nearly five years, with demand linked to semiconductors and data centers driving the recovery.

The Reuters Tankan sentiment index for manufacturers rose to plus-21 from plus-18 in August. That extended a steady rebound from plus-7 in April. Sentiment among non-manufacturers edged up to plus-29 from plus-28, remaining within the range seen through 2025 and this year.

Electronics companies led the manufacturing improvement. Their sub-index surged to plus-39 from plus-24, reflecting strong demand from data-center markets and a wave of artificial-intelligence investment reaching Japanese chip, testing-equipment and component suppliers. “Demand for the data-centre-related market is extremely strong,” a manager at an electronics company said.

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Demand for the data-centre-related market is extremely strong.

Precision machinery held at plus-29, while metal products rose slightly to plus-26. Textiles and paper pulp improved to plus-13 from zero, but steel and nonferrous metals remained at minus-13. Among non-manufacturers, real estate and construction rose to plus-37, transport and utilities climbed to plus-33, and retailers recovered to plus-18. Information and communications fell to plus-21 from plus-33. “We have been able to keep raising rents,” a real-estate company manager said, pointing to continued pricing power despite concern about higher interest rates.

The poll, a leading indicator of the Bank of Japan’s quarterly Tankan survey, collected responses from 224 of 510 companies between Aug. 26 and Sept. 4. Manufacturers expect sentiment to rise to plus-27 over the next three months, while non-manufacturers see their index holding at plus-27. Respondents identified Middle East tensions, raw-material costs and weaker domestic consumption as key risks.

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We have been able to keep raising rents.