Glossary: Japanese indicators: Tankan report

The Tankan survey is conducted on three major groups of enterprises: 716 major non-financial companies; 7,394 non-financial enterprises throughout Japan; and 202 financial institutions.

The questions asked by the survey can be classified into seven main groups:

1. Business conditions;
2. Production and sales;
3. Supply and demand conditions and price developments;
4. Corporate profit;
5. Capital investment;
6. Employment;
7. Financial conditions.

In answering the quantitative questions (two, four and five), companies are asked to show the actual and expected levels of various indicators such as production, sales, inventories, profit, investment, and liquidity.

For the qualitative analysis, enterprises asked to choose between three alternatives.

The results are expressed as a percentage; 4% is seen as average for the Japanese economy.

A weakness of the Tankan report is that a substantial element of the results is made up of forecasts, which are not always accurate. Also, companies' judgement of business conditions tends to lag behind actual developments because they assume that current conditions will continue. For example, when the economy is expanding forecasts tend to be outstripped by actual performance.