The Bank of Japan's Tankan index of sentiment among large manufacturers rose to plus 13 in the second quarter of 2024 from plus 11 in the previous quarter, hitting the highest level in two years amid an improving economic outlook.

The latest reading also topped market expectations of plus 12.

The largest gains were seen among manufacturers of textiles (22 in Q2 vs 11 in Q1), chemicals (10 vs 2), pulp & paper (11 vs 4) and petroleum & coal products (17 vs 9).

Meanwhile, sentiment weakened among manufacturers of iron & steel (0 in Q2 vs 16 in Q1), food & beverage (21 vs 24) and production machinery (11 vs 17).

Looking ahead, large manufacturing firms see a further improvement in business conditions with a reading of plus 14 in the third quarter.

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