Tankan Small Non-Manufacturing Index

The Tankan Small Non-Manufacturing Index is the Business Conditions diffusion index (DI) for small service firms, Favorable % minus Unfavorable %, based mainly on profits. It belongs to Japan's Short-Term Economic Survey of Enterprises, called Tankan, run by the Bank of Japan (BoJ) each March, June, September and December.

It covers private firms with capital of 20 million yen or more. Financial institutions, consultants, pure holding firms and weakly connected research and medical industries sit outside it, and it tallies replies only. Small means capital 20 million yen to less than 100 million yen across 14 nonmanufacturing service industries, from 220,000 firms with a sample near 9,200. It reflects firm replies, not the Bank's own assessment or outlook.

Forms go out by mail or online code about one month before release, with replies due about two weeks after dispatch. Collection runs until one business day before release. Results appear over two business days in early April, July and October and in mid-December, always at 8:50 a.m. before the 9:00 a.m. open.

Day one brings the Summary with main figures and the Outline, and the next day brings the Comprehensive Data Set. The coming twelve months of dates appear near the ends of June and December, and the four-week schedule is updated every Friday. Published errors are fixed swiftly, while later respondent revisions are left out. The full 93-strata detail comes with yearly projections, inflation outlook and sample counts but no interpretation, and samples renew every two to three years.

The index blends replies from 14 nonmanufacturing industries, with each firm counting as one vote and no size weighting.

• Construction, Real estate, Wholesaling, Retailing: small builders, property firms, wholesalers and retailers.
• Transport & Postal activities, Communications: small transport, postal and communications firms.
• Information services, Other information communication: software, broadcast, internet and content firms.
• Goods rental & Leasing, Electric & Gas utilities: rental, leasing and energy utility firms.
• Mining & Quarrying of stone and gravel: small miners and quarry firms.
• Services for businesses, Services for individuals, Accommodations, Eating & Drinking services: corporate and consumer services plus hotels and restaurants.

The December 2022 round printed +6, after +2 in September, against a September forecast of -3 for December. It beat its forecast by 9 points and rose 4 points, while small manufacturing printed -2 from -4, so one cell cannot speak for all. Firms then forecast -1 for March 2023, down 7 points, since forecasts are firms' own three-month estimates, not the Bank's. That round covered 9,235 firms with 3,018 small nonmanufacturing ones at 99.4%, and ran 10 November to 13 December and was released 14 December 2022.

1. Reply: each firm picks Favorable, Not so favorable or Unfavorable for now and 3 months ahead, judging without seasonal effects itself. A not-applicable reply is coded 9.
2. Shares: for the small-nonmanufacturing cell, compute Favorable share P1 and Unfavorable share P3, each rounded to an integer.
3. DI: subtract: DI = P1 minus P3 in % points, with one firm counting as one vote and no size weighting. For example, 25% Favorable, 65% Not so favorable and 10% Unfavorable gives DI = 25 minus 10 = 15 % points.
4. Small-cell example: 3,000 replies split 1,050 Favorable, 1,500 Not so favorable and 450 Unfavorable. Shares are 35% and 15%, so DI = 35 minus 15 = +20 % points. A positive value means Favorable exceeded Unfavorable by that margin.
5. Exclusions and rounding: firms missing any judgment reply leave that DI entirely, and integer rounding can make changes look uneven across groupings.