The Reuters Tankan index for Japanese manufacturers jumped to +18 in March 2026 from +13 in February, marking its strongest level since December 2021, as a near-term rebound in industrial momentum was supported by robust semiconductor-related demand and a pickup across key manufacturing sectors. The improvement was broad-based, led by chemicals and petroleum-linked industries, where sentiment surged alongside stronger demand tied to the semiconductor cycle. Transport machinery, a core pillar of Japan’s export economy, also showed resilience amid solid vehicle production and healthy order books. Meanwhile, the steel and non-ferrous metals segment remained deeply negative due to weak demand linked to the auto sector. Looking ahead, manufacturers expect sentiment to ease to +14 by June, reflecting rising uncertainty from the Middle East conflict, elevated input costs, and external demand risks.