The Japanese manufacturing sector recorded a notable improvement in confidence levels during November 2026, driven by increasing demand for semiconductors and equipment related to artificial intelligence technology, in an indicator reflecting the Japanese economy's continued benefit from the global expansion in advanced electronic industries.
Results from the "Reuters Tankan" survey, published on Wednesday, November 11, showed the manufacturers' confidence index rising to 27 points, up from 22 points in October, marking its highest level since August 2021, at a time when global markets are witnessing increasing demand for chips used in data centers and advanced computing systems.
The electronics sector led this improvement, with its confidence index jumping to 39 points, compared to 25 points the previous month, benefiting from strong demand for memory chips. The precision machinery sector index, which includes companies specializing in semiconductor manufacturing equipment, also rose to 42 points, compared to 38 points in October.
Optimism extended to other industrial sectors, including chemicals, oil refining, and ceramics, while officials at companies participating in the survey noted the continued strength of domestic and foreign orders for equipment used in electronic chip production.
The improvement was not limited to factories, as the non-manufacturing business confidence index rose to 35 points, up from 23 points in October, marking the highest level since June 2018. Confidence in the information and communications sector also improved to 29 points, driven by increased demand for digital services.
The survey covered 214 companies out of 508 companies contacted during the period from October 27 to November 6, and is considered one of the indicators that help forecast trends in the Japanese economy before the release of the official Bank of Japan quarterly survey.
Despite the positive results, companies continue to face pressures related to rising prices, financing costs, and labor shortages, while some find it difficult to pass on production cost increases to consumers.
Forecasts indicate a potential rise in the manufacturers' confidence index to 28 points by February 2027, against a slight expected decline for the non-manufacturing index to 29 points.
These data confirm the growing role played by the semiconductor industry in supporting confidence in the Japanese economy, but they do not necessarily mean that industrial production will rise by the same percentage, as these indices measure companies' assessments of business conditions, not the actual volume of production.
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