FX.co ★ Japan Manufacturers’ Sentiment Strengthens in July

In July 2025, the Reuters Tankan index for Japanese manufacturers experienced an increase, rising to +7 from +6 in June, marking the first rise in three months. This improvement was largely attributed to a recovery in the semiconductor industry, despite prevailing concerns regarding US trade tariffs. Looking forward, manufacturers are optimistic, predicting the sentiment to rise to +8 by October. The electronics machinery sector index notably improved, climbing to -4 in July from -16 in June. Similarly, the chemicals sector index increased to +18 from +12, with multiple companies pointing to a resurgence in chip demand as a significant contributing factor. Conversely, the transport machinery sector, which is crucial to Japan’s automobile industry, experienced a significant downturn, with its index falling to +9 from +20. This decline has been partly blamed on the 25% US auto tariffs, which have adversely affected export volumes and raised operational costs. Despite the overall positive sentiment, manufacturers remain vigilant, closely monitoring the evolving US trade policies as a potential threat.