What was the change in Japanese manufacturers' sentiment index from April to May 2024, and what key sectors drove the modest improvement?

Japanese manufacturers' sentiment index rose slightly to plus 8 in May from plus 7 in April, according to the Reuters Tankan poll. This marginal improvement was driven primarily by recoveries in commodity-related industries: materials industries swung into positive territory (plus 5 from minus 3), chemicals rebounded sharply (plus 6 from minus 8), and steel and nonferrous metals improved to zero from minus 25. Managers at a chemicals firm and a ceramics firm attributed this to 'front-loaded demand due to the Middle East situation.' However, the overall rebound remained lukewarm, as weakness in transport machinery—especially autos and suppliers—capped gains, with that sector's index halving to plus 10 from plus 20.

Why did the transport machinery sector’s business sentiment decline sharply, and what specific supply chain disruption was cited?

The transport machinery sector’s business sentiment declined sharply—halving to plus 10 in May from plus 20 in April, and down from plus 36 in March—due to supply constraints linked to geopolitical tensions. A manager at a transport machinery company explicitly cited 'the blocking of the Strait of Hormuz' as the source of those production disruptions. This chokepoint closure, tied to the U.S.-Israel conflict with Iran, directly impaired input availability and manufacturing continuity for Japan’s auto industry and its extensive supplier network.

Japan Manufacturers' Mood Edges Up in May, Services Sector Slips: Reuters Poll

May 19, 2026

Japan's manufacturing sentiment rose slightly in May, led by chemicals and metals recovering from prior drops, while autos and food processors struggled amid supply constraints and rising raw material costs.

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