Japan ' s manufacturing confidence has been hampered by the cost of services as the demand for chips remains optimistic

JAPAN ' S MANUFACTURING CONFIDENCE, UNDERPINNED BY ROBUST SEMICONDUCTOR DEMAND, REMAINED RELATIVELY OPTIMISTIC AT 13 IN JULY. HOWEVER, NON-MANUFACTURING CONFIDENCE DECLINED AS A RESULT OF THE MIDDLE EAST CONFLICT, THE WEAK YEN AND RISING INTEREST RATES PUSHED UP COSTS, AND THE SHORT-TERM NON-MANUFACTURING WINDFALL INDEX FELL FROM 32 TO 25. MANUFACTURING ENTERPRISES REPORTED A RECOVERY IN THE SEMICONDUCTOR MARKET, A RAPID EXPANSION OF CHIP APPLICATIONS AND ORDERS FOR PRODUCTS RELATED TO THE AI SERVER AND A GENERAL RISE IN ELECTRONIC PARTS ORDERS. THE MANAGER OF A SOPHISTICATED MACHINE MANUFACTURER STATED THAT THE ORDER VOLUME AND THE ORDER VOLUME WERE AT UNPRECEDENTED LEVELS AND FEARED THAT THE CAPACITY WOULD NOT KEEP PACE. LOOKING AHEAD, MANUFACTURERS EXPECT THAT CONFIDENCE WILL REMAIN STABLE, THAT THE OCTOBER CLIMATE JUDGEMENT INDEX IS EXPECTED TO RISE SLIGHTLY TO 14, AND THAT THE NON-MANUFACTURING INDEX IS EXPECTED TO REMAIN AT 25, AS ENTERPRISES ARE ASSESSING THE IMPACT OF GEOPOLITICAL RISKS AND SUPPLY CHAIN CHALLENGES。