What is the Japan Tankan Survey Indicator?

What is the Tankan survey?

It is an economic survey of Japanese business which is conducted by the Bank of Japan (BoJ), the country’s central bank, which uses the results to formulate monetary policy in Japan. The report is published four times a year in April, July, October and mid-December.

Japan Tankan survey indicator

The word Tankan is an abbreviation for kigyo tanki keizai kansoku chōsa (which literally means Short Term Economic Observation). It’s basically a survey that measures the confidence of the business sector in Japan so that shows the status of the economy. Therefore, it is one of the key financial indicators in Japan and has considerable influence in Japanese share prices and in the exchange rate of the yen against other currencies like the US dollar.

The component “index of large manufacturers’ of Tankan survey is considered “a major gauge of economic growth.” It is the most important Japanese indicator. The growth of the index indicates the improvement of economic conditions and stimulates the growth of the national currency. The final Tankan figure is analyzed around zero, with zero being a neutral value. Any figure above zero is a positive signal for the country’s economy as it indicates that there are growth expectations, while numbers below zero are a negative signal because they mean that there is an expectation of economic contraction.

How the Tankan survey is conducted?

It is prepared through a survey of 10,000 Japanese companies in which their expectations for the future are collected. Its periodicity is quarterly. It is calculated as the percentage of positive expectations minus negative expectations.

The survey covers thousands of Japanese companies with a certain minimum capital, although firms deemed sufficiently influential may also be included. The companies are asked about current trends and conditions in their place of business and their respective industries and the business activities expected for the next quarter and next year.

Financial instruments that are influenced by the results of this indicator

The markets in which the Tankan survey indicator has the most influence are:

  • Shares of the stock market in Japan.
  • The Nikkei 225 index.
  • Currency pairs including the Japanese yen as the USD/JPY, EUR/JPY, GBP/JPY, etc.

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