Japan’s Business Survey Index (BSI) for large manufacturing firms unexpectedly rose to 3.8% in the third quarter of 2025, up from -4.8% in the previous quarter — the lowest reading since Q1 2024. The result easily beat market expectations for a decline to 3.3%, marking the highest level since Q4 2024 and the first return to positive territory in three quarters. The improvement reflects a sharp rebound in exports, as firms front-loaded shipments to the US ahead of newly imposed 15% blanket tariffs. Last week, US President Donald Trump signed an executive order to implement a trade deal with Japan, introducing 15% baseline tariffs on most Japanese goods, including automobiles. The BSI, based on a survey of large Japanese manufacturers, serves as a key gauge of economic health in a country heavily reliant on industrial output. Manufacturers remain optimistic about the months ahead, projecting a further rise to 3.9% in Q4, followed by a slight decline to 3.3% in Q1 2026.