Global| Jul 02 2007Tankan Shows Flatness Q to Q
Summary
Tankan forward-looking survey shows some weakness.
In the Tankan Survey, size matters; Tankan index shows that the smaller the firm the less robust and ‘lasting’ the recovery. Japan’s Tankan index was flat in June (Q2) and its index edged lower in its outlook for Q3. For large firms (the headline group) the Tankan was flat in Q2. But for medium sized firms responses faded to their weakest point since Q2 2006. For small firms the two-quarter slide in the index took them back to where they were in Q4 2006. The headline large company outlook index is off by one point for Q3; for the small and medium sized companies the drop-off is two points. Moreover the forecasting performance of the TANKAN is not very impressive. The clear message from this report is that business activity in Japan has slowed and has done so across all types of business hurting small business the most. While other current indicators have been weak, Japanese officials set those reports aside, such as the drop in industrial production, and opting for looking at forecasts of gains for the months ahead.
It is not clear how strong the months’ ahead demand will be with weakness across sectors and reflected in consumer confidence readings as well as indicators such as the economy-watchers index.
| Q2-07 | Q1-07 | Q4-06 | Q3-06 | 1-Y Avg | Since Q3'03 | |
| MFG | 23.0 | 23.0 | 25.0 | 24.0 | 23.8 | 20.7 |
| Nonmanufacturing | 22.0 | 22.0 | 22.0 | 20.0 | 21.5 | 15.6 |
| Total Industry | 22.0 | 22.0 | 22.0 | 20.0 | 21.5 | 15.6 |
| Construction | 2.0 | -1.0 | 3.0 | 4.0 | 2.0 | -4.6 |
| Real Estate | 53.0 | 53.0 | 46.0 | 45.0 | 49.3 | 31.8 |
| Wholesale | 23.0 | 22.0 | 24.0 | 21.0 | 22.5 | 20.4 |
| Retail | 11.0 | 13.0 | 13.0 | 15.0 | 13.0 | 7.1 |
| Transportation | 24.0 | 22.0 | 21.0 | 15.0 | 20.5 | 13.9 |
| Services for Business | 35.0 | 37.0 | 32.0 | 20.0 | 31.0 | 23.8 |
| Personal Services | 10.0 | 19.0 | 10.0 | 13.0 | 13.0 | 9.7 |
| Restaurants & Hotels | 11.0 | 17.0 | 19.0 | 18.0 | 16.3 | 7.1 |
| Forecast | ||||||
| MFG - Outlook | 20.0 | 22.0 | 21.0 | 22.0 | 21.3 | 17.9 |
| NonMFG - Outlook | 23.0 | 20.0 | 21.0 | 21.0 | 21.3 | 14.5 |
| All Industry - Outlook | 22.0 | 20.0 | 20.0 | 21.0 | 20.8 | 15.9 |
| Tankan Results Medium Enterprises | ||||||
| Q2-07 | Q1-07 | Q4-06 | Q3-06 | 1-Y Avg | Since Q3'03 | |
| MFG | 13.0 | 16.0 | 17.0 | 14.0 | 15.0 | 11.0 |
| NonMFG | 8.0 | 5.0 | 4.0 | 5.0 | 5.5 | 0.9 |
| Forecast | ||||||
| MFG - Outlook | 12.0 | 12.0 | 11.0 | 13.0 | 12.0 | 6.9 |
| NonMFG - Outlook | 4.0 | 2.0 | 4.0 | 6.0 | 4.0 | -0.1 |
| All Industry - Outlook | 8.0 | 6.0 | 7.0 | 9.0 | 7.5 | 2.9 |
| Tankan Results Small Enterprises | ||||||
| Q2-07 | Q1-07 | Q4-06 | Q3-06 | 1-Y Avg | Since Q3'03 | |
| MFG | 6.0 | 8.0 | 10.0 | 6.0 | 7.5 | 4.6 |
| Nonmanufacturing | -7.0 | -6.0 | -6.0 | -8.0 | -6.8 | -11.1 |
| Total Industry | -7.0 | -6.0 | -6.0 | -8.0 | -6.8 | -11.1 |
| Forecast | ||||||
| MFG - Outlook | 7.0 | 5.0 | 7.0 | 7.0 | 6.5 | 2.4 |
| NonMFG - Outlook | -10.0 | -10.0 | -9.0 | -9.0 | -9.5 | -13.9 |
| All Industry - Outlook | -4.0 | -4.0 | -3.0 | -4.0 | -3.8 | -7.9 |
Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.
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