FX.co ★ Japan Manufacturers’ Mood Weakens in October

In October 2025, the Reuters Tankan index for Japanese manufacturers decreased to +8, down from a three-year peak of +13 in September. This marks the first decline in four months, attributed to challenges arising from US tariffs, escalating costs, and weak overseas demand. Out of the nine manufacturing sectors surveyed, five reported diminished confidence levels. Notably, the auto and transport machinery sector experienced the steepest decline, with its index dropping to +9 from +33. This sector, which accounted for roughly one-third of Japan’s exports to the United States last year and employs about 8% of the nation’s workforce, has been adversely affected by the 15% US tariffs implemented under the trade agreement with the Trump administration. Continuous increases in the costs of raw materials, labor, and energy have further pressured sentiment. The index is expected to decrease further to +4 by January.