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Takashi Miwa, Research Analyst at Nomura points out that in the September 2018 BOJ Tankan, the current business conditions DI for large manufacturers was +19, a deterioration of 2pt from the previous survey (June), while the DI for large nonmanufacturers was also down 2pt from the previous survey at +22.

Key Quotes

“While the market consensus forecast had seen a decline in the DI for nonmanufacturers stemming from natural disasters in Jul-Sep (the QUICK survey called for a 1pt deterioration to +23), it had expected the DI for manufacturers to remain flat, so the decline comes as something of a surprise.”

“Considering the conspicuous decline for materials (-6pt), we think the deterioration may reflect not only concerns over a global decline in demand stemming from US protectionist trade policies but also caution regarding the recent rise in resource prices.”