What’s going on here?
Japanese companies have just posted their most upbeat business outlook in over a year, with S&P Global’s latest survey showing confidence surging across the private sector in October 2025.
What does this mean?
According to S&P Global’s tri-annual survey, Japan’s business leaders are heading into the next year with renewed optimism. The output index reached a net balance of 21%—the highest since June 2024—driven by strong plans for research and development, capital investment, and new hiring. Manufacturers were especially bullish, posting a 25% net balance for output growth expectations, outpacing the service sector’s 20%. Much of this optimism can be credited to targeted government stimulus, fresh product launches, and a deliberate push to expand production capacity and boost both domestic and international sales. Still, executives are keeping a close eye on labor shortages, rising costs—particularly wages—persistent US trade uncertainties, and the weak yen.
Why should I care?
For markets: Confidence could set the pace for further growth.
Japanese stock markets tend to rally on improving business sentiment. As companies set bigger budgets and ramp up hiring, investors often see this as a signal for stronger earnings and fresh investment cycles. The Nikkei 225 and Topix indexes have previously gained on similar optimism, so this renewed confidence could drive further momentum. That said, challenges like rising costs and a soft yen may keep near-term gains in check.
The bigger picture: Japan is reasserting its global presence.
Japan’s upbeat outlook suggests it’s gearing up to compete globally, especially in advanced manufacturing and technology. Higher spending on capital projects and innovation could help sharpen its edge in export markets, even as broader uncertainties—like shifting US trade policies and higher global rates—linger. If Japan maintains this confidence, its growth could help steady the global economy as slower countries look for support.
AloJapan.com