The Tankan Large All Industry Capex for Japan surged to 12.50% year-over-year in September 2025, according to the latest release from the Sigmanomics database. This figure notably exceeded the consensus estimate of 5.00% and improved on the previous quarter’s 11.50% reading. The data reflects a strong corporate investment environment, signaling confidence in Japan’s economic recovery and growth prospects.

Drivers this month

• Manufacturing sector investment increased, driven by technology upgrades and automation.
• Non-manufacturing sectors showed moderate capex growth, supported by service sector expansion.
• Inventory replenishment and supply chain resilience investments contributed positively.

Policy pulse

The capex growth aligns with the Bank of Japan’s accommodative monetary policy stance, which continues to support low borrowing costs. The 12.50% increase is consistent with the central bank’s inflation target environment, encouraging firms to invest despite global uncertainties.

Market lens

Immediate reaction: The Japanese yen (JPY) strengthened by 0.30% against the USD within the first hour post-release, while 2-year JGB yields rose by 5 basis points, reflecting increased risk appetite and expectations of moderate tightening ahead.

Japan’s Tankan Large All Industry Capex is a core macroeconomic indicator reflecting corporate investment trends. The 12.50% YoY growth in September 2025 is well above the 12-month average of approximately 9.50% since 2023, indicating a robust expansion phase. Historically, capex growth above 10% has coincided with periods of strong GDP growth and industrial output expansion.

Monetary Policy & Financial Conditions

The Bank of Japan’s yield curve control and ultra-low interest rates have kept financing costs subdued. This environment has encouraged firms to increase capital spending, particularly in technology and infrastructure. Financial conditions remain accommodative, with credit spreads stable and corporate bond issuance healthy.

Fiscal Policy & Government Budget

Japan’s fiscal policy continues to provide moderate stimulus through infrastructure projects and innovation grants. The government’s budget for FY2025 includes increased allocations for green technology and digital transformation, supporting the capex uptick. However, fiscal consolidation pressures remain a medium-term concern.

External Shocks & Geopolitical Risks

Global supply chain disruptions and geopolitical tensions in East Asia pose risks to sustained investment growth. While firms are investing to mitigate these risks, uncertainty around trade policies and energy prices could dampen future capex momentum.

Figure 1: Tankan Large All Industry Capex YoY (%) - Sep 2025: 12.50% - Jun 2025: 11.50% - Mar 2025: 3.10% - Oct 2023 peak: 13.60% - 12-month average: ~9.50%

Market lens

Immediate reaction: The JPY/USD exchange rate appreciated by 0.30%, reflecting positive sentiment. Meanwhile, 2-year JGB yields increased by 5 basis points, indicating market anticipation of gradual monetary policy normalization amid stronger economic signals.

Looking ahead, the Tankan Large All Industry Capex reading sets the stage for several scenarios over the next 6-12 months. The bullish case (40% probability) assumes sustained global demand, stable geopolitical conditions, and continued accommodative monetary policy. Under this scenario, capex growth could maintain above 10%, supporting GDP growth near 2.50% annually.

The base case (45% probability) envisions moderate growth of 6-8% capex, with some headwinds from supply chain constraints and cautious fiscal tightening. This would still underpin steady economic expansion but with more volatility.

The bearish case (15% probability) involves escalating geopolitical risks, energy price shocks, or a sharper global slowdown. Capex growth could then fall below 3%, risking stagnation or contraction in industrial output.

Structural & Long-Run Trends

Japan’s aging population and labor shortages continue to pressure productivity. Capital investment in automation and AI is critical to offset these trends. The current capex surge reflects this structural shift, with firms prioritizing technology upgrades to sustain competitiveness.

The latest Tankan Large All Industry Capex reading of 12.50% confirms a robust investment cycle in Japan’s corporate sector. Supported by accommodative monetary policy, moderate fiscal stimulus, and structural modernization, capex is poised to remain a growth pillar. However, external shocks and geopolitical uncertainties require vigilance. Market participants should monitor upcoming Tankan releases and related macro indicators closely.

Overall, the data suggests a cautiously optimistic outlook for Japan’s economy, balancing strong domestic investment with external risks.

Key Markets Likely to React to Tankan Large All Industry Capex

Japan’s Tankan Large All Industry Capex is a bellwether for corporate investment and economic health. Markets that track this indicator closely include Japanese equities, the yen, and government bonds. The following symbols historically correlate with capex trends and are likely to react to future releases:

• 7203.T – Toyota Motor Corp, a major industrial player sensitive to capex cycles.
• JPYUSD – The yen-dollar exchange rate, reflecting capital flows and risk sentiment.
• 6758.T – Sony Group, representing technology sector investment trends.
• BTCUSD – Bitcoin, as a risk-on asset influenced by macroeconomic sentiment shifts.
• EURJPY – Euro-yen pair, sensitive to relative monetary policy and risk appetite.

Indicator vs. 7203.T (Toyota Motor Corp) Since 2020

Since 2020, Toyota’s stock price has shown a positive correlation with the Tankan Large All Industry Capex. Periods of rising capex, such as late 2023 and mid-2024, coincided with Toyota’s share price gains of 15-20%. This relationship underscores how corporate investment trends drive industrial sector valuations in Japan.

FAQs

What is the Tankan Large All Industry Capex?

The Tankan Large All Industry Capex measures year-over-year changes in capital expenditure by large Japanese firms across all industries. It reflects corporate investment trends and economic confidence.

How does the Tankan Capex impact Japan’s economy?

Higher capex indicates increased business investment, which drives productivity, employment, and GDP growth. It also signals corporate optimism about future demand and profitability.

What factors influence the Tankan Large All Industry Capex?

Monetary policy, fiscal stimulus, global economic conditions, geopolitical risks, and structural trends like automation all affect corporate investment decisions captured by the Tankan Capex.

Final takeaway: Japan’s Tankan Large All Industry Capex at 12.50% signals strong corporate investment momentum, underpinning economic growth despite external uncertainties. Monitoring this indicator remains critical for assessing Japan’s macro trajectory.