Nissan Motor Co., Ltd has developed a technologically advanced Universal Powertrain Mounting System, featuring a two-layer pallet structure, which is compatible with electric vehicles (EV), e-POWER (HV), and gasoline vehicles. This innovative system is located in Kawachi-gun, in Tochigi prefecture, Japan. The image of this system captures the essence of Nissan’s commitment to sustainable mobility and technological advancements.
According to a recent survey conducted by the central bank, Japanese business sentiment has seen a significant improvement in the second quarter. This positive trend can be attributed to the decline in raw material costs and the easing of pandemic restrictions, resulting in a boost in factory output and consumption. These upward trends indicate that the Japanese economy is steadily recovering and on track for further growth.
The survey, known as the “tankan,” reveals that companies are optimistic about the future. They anticipate an increase in capital expenditure and expect inflation rates to surpass the Bank of Japan’s 2 percent target in the next five years. This data provides policymakers with hope that the conditions necessary for gradually scaling back the extensive monetary stimulus measures are gradually falling into place.
In June, the headline index measuring the mood of big manufacturers stood at plus 5, marking a rebound from its lowest point in two years (plus 1) recorded in March. This improvement indicates that companies are recovering from the adverse impact of rising raw material costs and supply disruptions. Furthermore, this reading, surpassing the market forecast of plus 3, is the highest it has been since December 2022.
The sentiment index for big non-manufacturers also saw an improvement, rising to plus 23 in June from plus 22 three months earlier. This upward trajectory has been consistent over the past five quarters, reaching its highest level since June 2019. The recovery in sectors such as automobiles and energy, along with strong capital expenditure, has contributed to this positive sentiment among machinery makers.
Looking ahead, while big manufacturers expect business conditions to improve in the next three months, non-manufacturers anticipate a slight deterioration. Nevertheless, large firms plan to increase their capital expenditure by 13.4 percent in the fiscal year ending in March 2024, surpassing the previous projection of a 3.2 percent increase made in the March survey. This exceeds the market forecast of a 10.1 percent rise, demonstrating companies’ confidence in future growth.
Additionally, the tankan survey reveals that companies project an inflation rate of 2.6 percent a year from now, slightly lower than the 2.8 percent forecast made in March. Meanwhile, inflation expectations for three years from now stand at 2.2 percent, down from 2.3 percent in March, and 2.1 percent five years from now, unchanged from the previous projection.
The Japanese economy recorded a growth rate of 2.7 percent in the first quarter, and analysts predict continued expansion. Despite challenges posed by global economic conditions, domestic spending has picked up following the pandemic, offsetting potential headwinds to exports.
It is worth noting that Bank of Japan Governor Kazuo Ueda has emphasized the need to maintain ultra-loose monetary policy until inflation reaches the bank’s 2 percent target sustainably, accompanied by solid wage growth.
In conclusion, the tankan survey results confirm that Japan’s economy is on a path of moderate recovery. The positive outlook, with expectations of increased capital expenditure and projected inflation, provides further encouragement for policymakers and reinforces the potential for a reduction in monetary stimulus measures.
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