Equilon FXKeep these questions in view.
- Sector and enterprise-size group
- Current assessment or forecast
- Exact wording and sign convention
- Opinion balance or quantitative figure
Use Full reading for the reasoning, worked example and original references.
A survey with more than one format
The Tankan combines judgement-based questions about business conditions with quantitative information about corporate activity and plans. A headline business-conditions index is only one part of the release. Identify the sector, enterprise size and whether the figure concerns current conditions or a forecast.
How a diffusion index works
For the business-conditions balance, the share of favourable responses is reduced by the share of unfavourable responses. Neutral responses still belong to the total sample. The result is a balance in percentage points, not a rate of growth in production or profits.
The question determines the sign
Different survey items ask about different conditions. A positive balance in one item cannot automatically be read as good news in every other item. Check the wording and the two categories being subtracted, particularly for inventories, capacity or price changes.
Read plans and observations separately
A plan is not a realised result, and a forecast response is not the same as a current assessment. Comparing the two can reveal a change in expectations, but should not erase their different meanings. Use the quantitative and judgement sections together when the question requires both.
A +25 balance without 25% growth
In a hypothetical sample, 40% of firms report favourable conditions, 45% neutral and 15% unfavourable. The balance is +25 percentage points. No information in that calculation establishes that sales, profits or production grew by 25%.
What kind of statement is this?
Bank of Japan / Quarterly / Diffusion indexes and quantitative plans
A balance of business opinions is informative precisely because it asks a different question from output statistics.
This material does not establish a future policy decision, a live exchange rate or the direction of the next market move. Those questions require dated evidence and a specific comparison.
40% report favourable, 45% neutral and 15% unfavourable conditions. What is the balance?
Keep the language clear Three useful definitions
Diffusion index — A summary of the balance or distribution of survey responses. In the Tankan business-conditions index, favourable responses are compared with unfavourable responses. Read more ↗
Percentage point — The arithmetic difference between two percentages. A move from 3% to 4% is one percentage point. Read more ↗
Revision — An update to an earlier published value. Read revisions alongside the newest observation when a release includes them. Read more ↗
Original references.
Institutional descriptions were prepared against these references for this edition. Follow the source for current decisions, releases and methodology. Numerical examples on this page are illustrative.