Business sentiment among Japan’s largest manufacturers improved in August 2026, supported mainly by continued strength in semiconductor-related industries. The Reuters Tankan manufacturing index climbed to +18 from +13 in July, reaching its highest level since March.
Technology-related industries led the improvement, reflecting continued demand for electronics and semiconductor investment.
The figures suggest that semiconductor demand continues to provide an important source of support for Japan’s manufacturing sector, even as conditions remain uneven across industries.
Confidence outside manufacturing also strengthened during the month. The non-manufacturing index increased to +28 from +25, supported by resilient domestic consumption and relatively firm activity across service industries.
Despite the stronger August readings, manufacturers remain somewhat cautious about the months ahead. The manufacturing sentiment index is expected to ease to +16 by November, indicating that businesses are not yet convinced the recent improvement will be sustained.
Overall, the August survey points to firmer business conditions across much of the Japanese economy, with semiconductor-related demand and services providing the strongest support.
Global markets remained focused on escalating Middle East tensions as rising oil prices strengthened inflation concerns and expectations for further monetary tightening.
Fed Turns Hawkish (31 August – 4 September)Global markets entered the week with renewed focus on Federal Reserve tightening after Chair Kevin Warsh used his Jackson Hole address to push back against expectations that US inflation pressures were fading. The Dollar Index held near 99.6 after Friday’s sharp advance, while Treasury yields moved higher and precious metals retreated. Markets raised the probability of a September Fed rate hike to 57% from 40% a week earlier as Warsh reiterated the Fed’s commitment to returning inflation to its 2% target.
Detail Hawkish Fed Lifts Dollar, Pressures Markets (08.31.2026)Global markets came under pressure after Fed Chair Kevin Warsh’s hawkish remarks strengthened expectations for a September rate hike.
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