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According to the Reuters Bank of Japan (BoJ) Tankan survey, which was conducted across 261 firms from August 1st to 14th, manufacturing confidence has hit a seven-month high in Japan, though non-manufacturing is seeing a slump into two-year lows.

Key highlights

Japan manufacturers index +30 in Aug vs +25 in July, highest reading since January.

Non-manufacturers index +25 in Aug. vs +34 in July, lowest level since Dec 2016.

Business confidence among Japanese manufacturers was at its highest in seven months.

Service sector’s mood hit its lowest since 2016, casting doubt on the robustness of domestic demand.

Manufacturers’ sentiment was expected to rise further over the coming three months despite concerns over global trade tensions and market turmoil stemming from some emerging economies.

Service-sector sentiment is also expected to recover from August’s deterioration, which was caused in part by abnormal weather such as the flooding rains and heat waves that struck various parts of Japan this summer.