The Bank of Japan gave a positive read on the economy in its quarterly “tankan” survey on Oct. 1, reporting large manufacturers’ sentiment rose to 24 from 22.
The report, widely viewed as a key indicator on Japan ’s economic vitality, said the sentiment among large non-manufacturers fell to 35 from 37.
The survey show companies foreseeing good conditions minus those feeling pessimistic. The key indicator of business sentiment has now been improving for the sixth quarter straight.
The positive reading comes despite widespread challenges for Japanese society, including soaring oil prices. The war in Iran has effectively closed the Strait of Hormuz, where resource-poor Japan had previously received most of its oil imports.
The Bank of Japan raised its benchmark interest rate twice this year, in June and September, to 1.25 percent, a three-decade high. The bank cited challenges stemming from a weak Japanese yen and higher prices.
The central bank has been trying to normalize monetary policy lately after decades of keeping interest rates near or below zero.
Higher rates in theory support a stronger currency. But the Japanese yen remains relatively weak, adding to the challenges of rising import prices. The U.S. dollar has been trading at nearly 160 yen, up from 110-yen levels five years ago.
