Business sentiment among Japan’s large manufacturers deteriorated in the second quarter of 2026, as the BSI Large Manufacturing Conditions index fell into negative territory. The index declined to -1.8 in Q2 2026 from 3.8 in the first quarter of 2026, according to data updated on 10 June 2026.
The move from positive to negative readings signals that, on balance, large manufacturers have turned more pessimistic about current business conditions compared with the previous quarter. The shift suggests a more challenging operating environment for Japan’s key industrial sector heading into the middle of 2026.
Investors and policymakers are likely to monitor subsequent readings closely to assess whether this negative turn in sentiment is temporary or the start of a more prolonged downturn in Japan’s manufacturing outlook.
