Sentiment turns positive among big Japanese firms in July-September

Business sentiment among large Japanese companies turned positive in the July-September quarter thanks to stronger semiconductor-related demand and more customers at hotels and restaurants, government data showed Friday.

The business survey index for large companies stood at plus 5.3, compared with minus 0.5 in the previous three months, according to the data released by the Finance Ministry and the Cabinet Office.

The index is calculated by subtracting the percentage of companies reporting deteriorating business conditions over the preceding three months from that of those reporting improved conditions.

The impact of the war in Iran had eased from the April-June quarter, a Finance Ministry official said. Citing the recent rise in crude oil prices, however, the official said, “We’ll continue to closely monitor corporate activities.”

The index for large manufacturers stood at plus 7.6. The production machinery manufacturing sector posted an index reading of plus 23.4 on increased demand for semiconductor manufacturing equipment.

The information and communications equipment manufacturing sector had a reading of plus 19.9, thanks to growing demand tied to artificial intelligence data centers.

The index for large nonmanufacturers was at plus 4.2. The service sector, including hotels and restaurants, posted a reading of plus 7.6, while finance and insurance companies recorded a reading of plus 3.4 as higher lending rates improved earnings.

The index for midsize companies was at plus 0.8, while that for small companies was at minus 10.9.

Companies across all sizes and industries expect to report higher sales and profits for fiscal 2026 from the previous year. Capital investment is projected to increase 11%.