In the third quarter of 2025, the Bank of Japan's index for large manufacturers rose to 14, up from 13 in the previous quarter. This marks consecutive quarterly improvement and the highest figure since the fourth quarter of 2024. The uptick can be attributed to the calming effects of a trade agreement between Tokyo and Washington, which alleviated previous concerns regarding U.S. tariffs. However, the latest figures fell short of the market's expected consensus of 15.
There was notable confidence among firms within specific sectors: textiles saw an increase to 4 from 0, chemicals to 15 from 14, ceramics, stone & clay to 30 from 17, general-purpose machinery to 27 from 23, production machinery to 17 from 15, electrical machinery to 16 from 11, shipbuilding and heavy machinery to 36 from 27, processed metals to 0 from -3, and motor vehicles to 10 from 8. Conversely, sentiment in business-oriented machinery remained unchanged at 22, while declines were observed in lumber & wood, which fell to -8 from 0, petroleum and coal dropping to 0 from 9, and iron & steel, which decreased to -14 from -3.
In terms of capital investment, large companies planned a 12.5% increase in the third quarter. This follows an 11.5% growth in the first quarter and signifies the most substantial rise in seven quarters.
