Japan manufacturers grow more upbeat as chip demand lifts sentiment

Japan’s factory mood improved again in June, but the recovery still looked selective rather than broad-based. The Reuters Tankan survey showed manufacturers’ sentiment rising to plus 13 from plus 8 in May, with chemicals leading the gain as its index jumped to plus 20 from plus 6 on the back of persistent semiconductor demand.

The monthly poll, which ran from June 3 to June 12 and received responses from 215 of 490 companies, is watched closely as an early signal for the Bank of Japan’s quarterly Tankan. Company managers pointed to booming orders tied to semiconductors and steady demand from electronics and machinery customers, a sign that Japan’s industrial momentum is still being driven by the global chip cycle and the buildout around artificial intelligence.

The improvement was not confined to factories. Non-manufacturers’ sentiment rose to plus 32 from plus 29, helped by firmer conditions in real estate and construction. One real estate industry manager said demand for housing remained robust despite rising costs, and that new projects were moving through steadily. That strength suggests parts of Japan’s domestic economy are still finding support even as higher prices squeeze margins.

The weakness came into sharper focus in transport machinery, a category that includes Japan’s major automakers. The sector’s sentiment was forecast to fall to minus 13 in September from plus 13 in June, with one transport machinery manager citing concern over supply chain disruptions and geopolitical tensions. That gap between chip-linked industries and carmakers underscores how uneven Japan’s recovery remains.

The latest reading fits a recent pattern of volatility. Reuters Tankan manufacturing sentiment had reached plus 18 in March, its strongest level since December 2021, before easing to plus 8 in May and then rebounding in June. By comparison, the Bank of Japan’s March 2026 Tankan, which covered 9,209 enterprises with a 99.0% response rate, showed large-enterprise manufacturing business conditions at 16 and a June forecast of 14. The central bank’s next quarterly Tankan is scheduled for June 30.

That mix of stronger chip demand, resilient construction activity and softer auto sentiment points to a recovery that is real but uneven. CNBC reported on June 17 that Japan’s exports rose at the fastest pace in more than three years, reinforcing the near-term lift from tech-related demand. But with forward-looking sentiment still fragile in some sectors, the June survey suggested Japan’s industrial upswing may still be leaning heavily on a narrow slice of the economy rather than spreading across corporate Japan.