Tankan Manufacturing and Non-Manufacturing Indices

Release Date: Usually released on quarterly, around the end of the current quarter
Release Time: At 7.50pm US Eastern Time
Released By: The Bank of Japan

The Tankan report is released by the Bank of Japan and is composed of two sets of data.

  • The Tankan Manufacturing Index is manufacturing sentiment indicator. It is an indicator of future business spending and also a diffusion index based on a survey of large manufacturers in Japan.
  • The Tankan Non-Manufacturing Index is a leading indicator of economic health. It is derived via a survey of about 1,200 large businesses which asks respondents to rate the relative level of general business conditions. The indicator is a diffusion index based on surveyed large businesses outside of the manufacturing industry. It is also called the Tankan Large Non-Manufacturing Index.

Generally speaking, the following parameters are surveyed:

  • Change in interest rate on loans
  • Lending attitude of financial institutions
  • Financial position of the surveyed industries
  • Production capacity (Tankan Manufacturing Index only)
  • Software and Fixed Investments excluding Land Purchases
  • Fixed Investments including Land Purchases
  • Ratio of Current Profit to Sales
  • Sales
  • Supply and Demand Conditions, Inventories and Pricing (Tankan Manufacturing Index only)
  • Business Conditions
  • Average of Predicted Exchange Rates

The responses in the survey questionnaire are usually broken down according to the responses by large businesses, medium-scale businesses and small-scale enterprises.

Time of Release

The Tankan report is usually released on quarterly, around the end of the current quarter. The time of release is 7.50pm US Eastern Time. The data is released on the website of The Bank of Japan and also on independent news feeds from Bloomberg and Thomas Reuters.

Tankan outline on Bank of Japan website

Interpreting the Data

The Tankan reports are moderate impact news releases which are not directly tradable. The two data that make up the Tankan report are leading economic indicators that will typically look at what the spending habit of big businesses will be in the coming months. Businesses react very quickly to market conditions, and changes in their sentiment can be an early signal of future economic activity. Will businesses in Japan spend more on projects such as expansion, advertising, hiring or investment? These are the questions whose answers can be derived by looking at the responses from the Tankan Manufacturing and Non-Manufacturing Indices.

For the Tankan Manufacturing Index, values above 0.0 indicate improving conditions, while figures below 0.0 indicate worsening conditions. Manufacturing plays a crucial role in the export-oriented Japanese economy, and this survey is considered the best gauge of the industry’s health due to its large sample size and respected source. For the Tankan Non-Manufacturing Index, values above 0.0 indicate improving economic conditions while values below 0.0 indicate worsening conditions.