However, according to the Bank's Tankan (Short-Term Economic Survey of Enterprises in Japan), the diffusion index (DI) for production capacity has been approaching the turning point between insufficient and excessive capacity since the turn of 2019, and my view is that the increasing trend in business fixed investment may come to a halt.
Business fixed investment plans in the June 2019 Tankan were firm on the whole, both in manufacturing and nonmanufacturing. As shown in Chart 10, however, within manufacturing, investment plans of the processing industries, which are highly dependent on exports -- such as the general-purpose, production, and business oriented machinery, as well as the motor vehicles industries -- were below the past average.