The 207th Business Sentiment Survey: Regular Survey (January-March)

Approaching Middle East risks, growing anxiety: Sales DI decreased by 3.5 points, Profit DI increased by 0.1 points. Overall, the sales DI was -6.0 (down 3.5 points from the previous period), and the profit DI was -8.8 (up 0.1 points from the previous period). The sales DI increased in three industries: retail (+13.4 points from previous period), dining (+3.1 points), and services (+6.3 points). It decreased in four industries: manufacturing (-9.1 points), wholesale (-0.5 points), transportation (-25.7 points), and real estate (-13.7 points), showing a clear divergence. Against the backdrop of persistently rising prices, procurement costs have soared, and small and medium-sized enterprises (SMEs) downstream, struggling with insufficient price pass-through, are experiencing deteriorating profitability, which is putting a brake on their ability to respond to wage increases. Furthermore, the escalation of tensions in the Middle East has led to a surge in crude oil prices, contributing to a broad range of price increases, including fuel and energy costs, and showing signs of prolonged impact. For the April-June 2026 quarter, we predict the sales DI will decrease by 2.8 points and the profit DI by 6.1 points.

Fluctuating Capital Investment Intentions: 'Planned' for Manufacturing and Wholesale Decreased. Overall, for capital investment, 'in progress' was 15.7% (up 0.9 points from previous period), and 'planned' was 12.7% (down 0.8 points), totaling 28.4%. Notably, the 'planned' category decreased from the previous period in two industries: manufacturing at 10.7% (down 2.7 points) and wholesale at 5.7% (down 5.1 points).

Problem 'Rising Procurement Costs' Soars: 'Rising Procurement Costs' 78.1% (up 8.9 points from previous period). Regarding management issues, overall, 'rising procurement costs' was 78.1% (up 8.9 points), 'increased general expenses' was 51.4% (up 5.7 points), 'stagnant/decreasing sales' was 42.8% (down 3.1 points), and 'labor shortage' was 38.4% (down 4.7 points). 'Rising procurement costs' sharply increased against the backdrop of Middle East geopolitical instability.

'Wage Hikes' Hit the Brakes: 'Planned to implement' 58.2% (down 1.8 points from last year). Regarding 'wage increases,' 'planned to implement' was 58.2% (down 1.8 points from last year), indicating a slowdown. This decrease from the previous year was observed in all industries except dining and construction. Furthermore, on a monetary basis, both base-up and regular salary increases showed an increase in 'less than 1,000 yen' and '5,000 yen or more,' indicating a polarization trend.

For details, please refer here. https://www.osaka-shinkin.co.jp/pdf/report/202603_teirei.pdf Survey period: Mid-to-late March 2026 Target period: January-February 2026 (actuals), March (forecast), April-June 2026 (outlook) Target companies: 1,435 client companies of our bank (within Osaka Prefecture, Amagasaki City) Number of responding companies: 576 companies (response rate 40.1%) (responses via mailed questionnaires and Web)