The Journal The Authority on Global Business in Japan

Views of the Japanese market continue to improve, according to the latest Foreign Chambers in Japan Business Confidence Survey.

Conducted between April 12 and 21, the spring 2017 edition incorporates 296 valid responses from members of 19 foreign chambers of commerce and business organizations—a record number. A typical respondent company has been in Japan for more than 20 years, has 40 employees, and is involved in sales and trading or the service industry.

Since the last survey, conducted between October 18 and 28, 2016, the performance of companies has clearly risen.

On an index using a scale from +2 (strong improvement) to -2 (strong decline), optimism for growth in the Japanese economy over the next six months improved to +0.40 compared with +0.10 in the fall survey. Looking 12 months out revealed a similar increase: +0.55 compared with +0.27 in the previous survey.

Breaking this down by industry uncovered noticeable changes in the six-month view for finance (+0.38; previously +0.00), service (+0.41; previously +0.19), sales and trading (+0.43; previously +0.08), and manufacturing (+0.26; previously +0.03).

Respondents also reported a rise in company performance. The index for reported sales performance over the past six months was +0.70 compared with +0.34 in October, and profitability performance showed a similar increase at +0.66 (previously +0.38).

When asked about the economic outlook for the next six months, 85% of North American companies and 82% of European companies see growth, while 63% of their Australian and New Zealand counterparts anticipate such a boost. Only 2% plan to downsize, and just four of the respondents are considering withdrawal from Japan.

Identifying the reasons for a change in business performance, 61% cited their own efforts. The exchange rate was a key factor for just 7%—a big drop from 19% in the fall survey—while a change in resources rose slightly from 8% to 9%. A shift in competition played a role for 8%—an increase of two percentage points—and 15% cited other factors.

The survey also touched on Brexit and the Trans-Pacific Partnership (TPP). Asked how a bilateral agreement will affect the United States and Japan compared with TPP, 20% said it will be good for both, 18% said it will be good for the US but bad for Japan, 3% said it will be good only for Japan, and 35% feel it will be bad for both. European chamber members said that Brexit will be good for both the United Kingdom and the European Union, 9% see it as good only for the UK, 13% good only for the EU, and a whopping 65% said it will be bad for both.

The next survey will be conducted in October 2017.