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FAQ (Frequently Asked Questions) on Tankan (Short-term Economic Survey of Enterprises in Japan)

February 2011
Bank of Japan
Research and Statistics Department

Contents

List of Questions

1. Q&A regarding the outline of the Tankan

2. Q&A regarding the judgement survey

3. Q&A regarding the quantitative survey

4. Q&A regarding the accuracy of the Tankan

5. Q&A regarding measures taken to improve the transparency and users' convenience

6. Q&A regarding miscellaneous topics

List of Answers

1. Q&A regarding the outline of theTankan

1-1. What are the purposes and characteristics of theTankan?

TheTankan aims at contributing to the appropriate implementation of monetary policy by providing an accurate picture of business trends of enterprises in Japan. TheTankan is a nationwide business survey conducted on a quarterly basis (in March, June, September, and December),and covers overall corporate activities. It consists of two parts: a judgement survey and a quantitative survey on quarterly data and annual projections. The name "TANKAN" (note) is also widely known overseas.

Note: The Tankan is an abbreviation of "TANKI KEIZAI KANSOKU CHOUSA" (the Short-term Economic Survey of Enterprises in Japan).

1-2. Does the Tankan have legal authority? (Is there an obligation to respond?)

The Tankan is a statistical survey by the Bank of Japan in accordance with the Statistics Law (Law No.53 of 2007). Both based on The Statistics Law, a"notified statistical survey" differs from a"designated statistical survey" (e.g."Population Census", "Establishment and Enterprise Census", etc.) as the respondents are not legally enforced to cooperate. As for the Tankan, however, thanks to the understanding and cooperation of the sampled enterprises, almost all of them respond every time. According to The Statistics Law, confidentiality of answers to this survey shall be secured.

1-3. What information can we get from the survey results of theTankan?

To grasp the overall corporate activities precisely, the Tankan includes not only a"judgement survey," which asks firms how they view future economic developments, but also a"quantitative survey," which includes figures of sales, fixed investment, number of new graduates hired etc. (quarterly, semiannual, and annual figures). As for these data,"forecasts" are also surveyed in addition to"actual results." Thanks to its long history, the Tankan provides a wide range of consistent data over a long period. These features may be counted as strengths of the Tankan.

By combining the"judgement survey" and the"quantitative survey" and comparing them with past data in many ways, users can analyze economic conditions and corporate activities according to their own interests.

The survey results of the Tankan are aggregated figures of the responding enterprises and do not reflect the judgements or projections of the economy by the Bank of Japan.

1-4. What is the coverage of the Tankan?

For the"population enterprises" (currently about 210,000) of the Tankan, we use private enterprises (excluding financial institutions) with capital of 20 million yen and more of the"Establishment and Enterprise Census" conducted by the Ministry of Internal Affairs and Communications. We select sample enterprises from the"population enterprises" by industry and size classifications, under certain statistical criteria that have been set to statistical accuracy and other measuring instruments. There are currently about 10,000 sample enterprises.

We release figures for a total of 93 strata; 31 industries (17 in manufacturing and 14 in nonmanufacturing) and 3 sizes of enterprises (large, medium-sized, and small enterprises; note). We further break the strata down into smaller segments (to a total of 397 strata) when selecting sample enterprises and calculating population estimates to improve the accuracy of the statistics.

The latest revision made to the sample enterprises was in March 2010. For details, see the"Regular Revision of the Tankan Sample Enterprises" (March 2, 2010, Research and Statistics Department, the Bank of Japan).

Furthermore, surveys on financial institutions are regarded as sample surveys and used to supplement the Tankan (see 1-5.).

For details on selecting the sample enterprises (sample design), see "Sample Design and Sample Maintenance of 'TANKAN'" (released in June 2004).

Note: In the Tankan, sample enterprises are categorized into large, medium-sized, and small enterprises based on their capital, as shown in the table below.

Table : Capital
  Capital
  1 billion yen and more
Medium-sized enterprises 100 million yen to less than 1 billion yen
Small enterprises 20 million yen to less than 100 million yen

1-5. How are financial institutions treated in the Tankan?

From the March 2004 survey, surveys on financial institutions are regarded as sample surveys and used to supplement the Tankan (note).

On selecting sample enterprises, financial institutions are categorized into seven sectors: (i) City banks and trust banks; (ii) Member banks of the Regional/Second Regional Banks Associations of Japan; (iii) Shinkin banks; (iv) other financial institutions for small businesses; (v) Financial products transaction dealers; (vi) Insurance companies; and (vii) Non-deposit money corporations. Financial institutions belonging to these sectors are regarded as"population enterprises" (currently about 700). Sample enterprises (currently about 200) are chosen from these population enterprises under certain statistical criteria that have been set to target accuracy and other measuring instruments.

Although sample enterprises are categorized into the above seven sectors, they are further reorganized into five sectors for aggregation. This is done to maintain a stable sector classification for release in case of reorganizations crossing industries. The reorganized five sectors are: (i) Banks ([i] + [ii] of above); (ii) Shinkin banks and other financial institutions for small businesses ([iii] + [iv] of above); (iii) Financial products transaction dealers; (iv) Insurance companies; and (v) Non-deposit money corporations. The five sectors are not aggregated by size (such as large, medium-sized, and small enterprises). On selecting sample enterprises (sample design) and calculating population estimates, financial institutions are also further segmented (into a total of 18 strata) for the purpose of enhancing the statistical accuracy of the statistics. The latest revision made to the sample enterprises was in March 2010. For details, see the"Regular Revision of the TANKAN Sample Enterprises" (March 2, 2010, Research and Statistics Department, the Bank of Japan).

For details on selecting the sample enterprises (sample design), see "Sample Design and Sample Maintenance of 'TANKAN'" (released in June 2004).

Note: Fixed investment surveys on financial institutions used to be regarded as a supplementary survey of "Principal EnterprisesTANKAN" from the November 1989 survey (corresponds to the present December survey) until the December 2003 survey. From the March 2004 survey, however, it has been revised into a supplementary survey of the Tankan with the coverage of industries and surveying items expanded.

1-6. What is the history of the Tankan?

There are many business surveys conducted in and out of Japan. Among these surveys, the Tankan is one of the oldest. The first business survey ever conducted in Japan was the"Short-term survey of the industries" by the (then) Industrial Bank of Japan. This survey started in 1951 following the method of the"Economic test" by the IFO Institute for Economic Research of the former West Germany. By taking over and revising this survey, the Bank of Japan started the "Principal Enterprises TANKAN" in 1957. In 1974, the Bank of Japan began the "All Enterprises TANKAN". In 2004, the Bank made a substantial revision to the survey, and terminated the"Principal Enterprises TANKAN." Since the 2004 revision, the Bank has revised the sample enterprises and modified survey items in order to adequately reflect the structural changes of the Japanese economy.The latest revision took place in 2010 when the Bank revised the sample enterprises.

A Brief Chronology of the Tankan
August 1957
Start of "Short-term Economic Survey of Principal Enterprises (the Principal Enterprises TANKAN)" (coverage: 524 enterprises [346 manufacturing and 178 nonmanufacturing enterprises] *; quarterly survey).
May 1960
Start of "Business Conditions Survey of Small Enterprises" (2,666 enterprises [small manufacturing enterprises only]; semiannual survey).
May 1962
Revision of "Business Conditions Survey of Small Enterprises"; shifting from a semiannual survey to a quarterly survey.
November 1966
Title changed from "Business Conditions Survey of Small Enterprises" to"Short-term Economic Survey of Small Enterprises (Small Enterprises TANKAN)."
May 1974
Coverage extended for the "Short-term Economic Survey of Small Enterprises." The extended survey was named"Short-term Economic Survey of All Enterprises (the All Enterprises TANKAN)" (5,596 enterprises [4,243 manufacturing and 1,353 nonmanufacturing enterprises]). Large and medium-sized enterprises for the manufacturing sector and nonmanufacturing enterprises (large, medium-sized, and small enterprises) were added to the sample.
May 1983
Sample size largely extended mainly in the nonmanufacturing sector for the "All Enterprises TANKAN" (from 5,181 to 7,035 enterprises [among which nonmanufacturing: from 1,287 to 3,141 enterprises]).
November 1989
Start of the "Fixed investment of financial institutions" as a supplementary survey to the "Principal Enterprises TANKAN" (207 enterprises).
November 1993
Sample size largely extended mainly in the nonmanufacturing sector for the "All Enterprises TANKAN" (from 7,376 to 10,011 enterprises <among which nonmanufacturing : from 3,386 to 5,822 enterprises>).
March 1997
Difference in the questionnaires between the "All EnterprisesTANKAN" and the "Principal Enterprises TANKAN" eliminated (Along with this, the number of items surveyed was reduced to half for the "Principal Enterprises TANKAN").
March 1999
Samples added to the "All Enterprises TANKAN" (from 9,129 to 9,433 enterprises). Simultaneously, the release data was expanded and the status of the  "All EnterprisesTANKAN" was upgraded to become the main survey replacing the "Principal EnterprisesTANKAN" which was dropped to a reference.
March 2004
Switched data of size classification of the "All EnterprisesTANKAN" (hereafter the Tankan) from "regular employees" basis to "capital" basis. Sample enterprises also added (from 8,204 to 10,562). The "Principal Enterprises TANKAN" terminated and the survey on financial institutions classed as a sample survey supplementing the Tankan.
March 2007
Regular revision of the sample enterprises of the "All EnterprisesTANKAN" (from 9,789 to 11,026 enterprises).
March 2010
Regular revision of the sample enterprises of the Tankan (from 10,116 to 11,684 enterprises).
  • The sample was basically selected from enterprises meeting the following criteria: "stock exchange listed companies with capital of at least 100 million yen, excluding the financial and insurance industries"; and "principal enterprises generally reflecting the trends in their industries."

1-7. What are the main points of the "Revision of theTankan survey" which was completed in March 2004?

In line with the usual revision of sample enterprises, the following revisions were also conducted in the "Revision of theTANKAN survey" which was completed in March 2004.

  1. (1) Revise the industry classification and expand the industry coverage.
  2. (2) Switch data of size classification (large, medium-sized, and small enterprises) from "number of regular employees" basis to"capital" basis.
  3. (3) Revise and abolish survey items
  4. (4) Terminate the "Principal Enterprises TANKAN" which was classed as a reference index
  5. (5) Revise the aggregation method when responses of enterprises cannot be obtained (introduce the missing value imputation)
  6. (6) Revise the survey on financial institutions

For details on this revision, see "Final draft regarding the revision of the 'TANKAN'" (June 2001) (available in Japanese only), the Appendix of "Revision of TANKAN in the March 2004 Survey--Comparison between the pre- and post-revision in the December 2003 Survey" (March 2004), or "Sample Design and Sample Maintenance of 'TANKAN'" (June 2004). The latest revision of industry classification of the Tankan was conducted in March 2010.

For details on the revision, see "Revision of the Industry Classification of the Short-term Economic Survey of Enterprises in Japan (TANKAN survey)" (June 2008).

1-8. There is a discontinuity in the aggregated results due to the revision. Taking this into account, is there any useful material we can use for analysis?

There is a discontinuity between aggregates before and after the revision.

In the Tankan, a "preliminary survey" is conducted in advance for the newly covered enterprises and items. Figures are then reaggregated on the new basis in line with responding enterprises prior to the revision. These results are released in a form comparing the old and new bases ahead of the first survey after the revision (note). See "Regular Revision of the TANKAN Sample Enterprises" and "Data Comparison between pre- and post-revision of the Tankan in the December 2009 Survey" (March 2010) for information on the revision made to the sample enterprises in March 2010.

Also, there is a discontinuity in the March 2004 survey since the size classification has been switched from the number of regular employees basis to capital basis. The "Revision of the TANKAN," which was completed in March 2004, also includes an analysis on factors causing the discontinuity regarding the aggregates of the December 2003 survey on both the old and new bases. See "Revision of TANKAN in the March 2004 Survey--Comparison between the pre- and post-revision in the December 2003 Survey" (March 2004).

1-9. The Tankan is also released by the branches of the Bank of Japan. What is the difference from the one released by the head office (Research and Statistics Department)?

The head office of the Bank (Research and Statistics Department) releases results of the Tankan survey on a nationwide basis. Individual branches release the survey results of the enterprises within the region it covers (hereafter the Local Branch Tankan).

There are two major differences between the Tankan on a nationwide basis released by the head office and the Local Branch Tankan released by individual branches. The two main differences are as follows:

  1. (1) In order to reflect the industrial structure of each region, the samples of the Local Branch Tankan include some respondents that are not included in that of the nationwide-based the Tankan (such as "local establishments of large enterprises").
  2. (2) Regarding the aggregation method, while population estimates are calculated for the quantitative data of the Tankan, simple aggregates are calculated for the quantitative data of the Local Branch Tankan.

Users are advised to keep in mind of this difference between the Local Branch Tankan and the nationwide-based Tankan released by the head office. The Local Branch Tankan should be used as a reference material to grasp the economic conditions of the respective regions. Also from this aspect, it is inappropriate to compare the absolute levels of DIs and figures among branches (this also applies when comparing the Tankan and the Local Branch Tankan).

2. Q&A regarding the judgement survey

2-1. How is the Diffusion Index (DI) calculated?

In the judgement survey, answers from the responding enterprises ("1, 2, and 3") are aggregated into the Diffusion Index(DI) as shown below:

DI (% points)= percentage share of enterprises responding Choice 1 minus percentage share of enterprises responding Choice 3

For instance, "business conditions DI" indicates respondent's judgement on the "overall business conditions mainly in light of profits." Enterprises are asked to choose one out of the three judgments, "1. Favorable," "2. Not so favorable," and "3. Unfavorable." The percentage share of the number of enterprises for each judgment is calculated, and the percentage share of those which replied "3. Unfavorable " is subtracted from those which replied "1. Favorable."

With respect to the business conditions (actual result) of"large manufacturing enterprises" in the March 2006 survey, 30 percent replied "1. Favorable," 60 percent for "2. Not so favorable," and 10 percent for "3. Unfavorable." As a result, business conditions DI was "30 percent minus 10 percent equals 20 percent points."

Regarding the magnitude of changes in the DIs, there are some cases in which the figures appear to be inconsistent at first glance. For example, in the following case, the differences between the"actual result" and the "forecast" for all industries was "zero," while the difference for manufacturing was "plus two", and nonmanufacturing was "plus one."

This is because, on calculating the DI, the percentage shares of enterprises which replied "1. Favorable" and "3. Unfavorable," respectively, are rounded to integers (the first decimal place is rounded off) and this is done for figures of"manufacturing," "nonmanufacturing," and "all industries" respectively. Consequently, a "gap due to the round off" occurred for these figures.

Example: Business conditions DI of large enterprises in the March 2006 survey (% points)
Table : Example: Business conditions DI of large enterprises in the March 2006 survey (% points)
  Actual result Forecast Changes
(forecast minus actual result)
Manufacturing 20
(30% - 10%)
22
(28% - 6%)
+2
Nonmanufacturing 18
(25% - 7%)
19
(24% - 5%)
+1
All industries 20
(28% - 8%)
20
(26% - 6%)
0

On calculating the DI, enterprises are not weighted according to their sizes. This means that we adopt the simple averages of the so-called "1 vote per enterprise." This differs from the "quantitative survey" in which larger-scale enterprises have larger influences on the aggregates. Users are advised to keep this in mind when comparing the two surveys.

2-2. Why are the responses of the judgement survey aggregated into DIs?

Regarding the aggregated data, the percentage shares of the replies("1, 2, and 3") can be used directly. But, for instance, if you are interested in their long-term developments, it might be rather tedious or confusing to handle this type of data. In this sense, the DIs are compact and handy indicators which reflect the essence of the developments of these data.

2-3. How can the DIs be used?

For each judgement survey, the "actual result (judgement at the time of the survey)" and the "forecast (that for three months ahead)" are surveyed and "actual DI" and "forecast DI" are calculated thereby (note). One way to use this is to see how well enterprises are performing in terms of their forecasts by comparing the "forecast DI" of the previous survey with the "actual DI" of the present survey.

Users can also combine the DIs and the DI-related quantitative surveys ("business conditions DI" and "current profits" or "ratio of current profit to sales," "production capacity DI" and "fixed investment," "employment conditions DI" and "number of employees," etc.) or compare DIs during similar economic phases in the past according to their various analytical purposes.

Note: From the March 2004 survey, the item "forecast" has been abolished for the following DIs: "Inventory level of finished goods and merchandise"; "Wholesalers' inventory level"; "Financial position"; and "Lending attitude of financial institutions." In addition to this, "forecast" is not surveyed for the "Conditions for CP issuance DI" which is an item newly surveyed from the March 2004 survey. This is because responding enterprises tend to make cautious judgments regarding the "forecast," and these judgments tend to bring about a bias in the aggregates of the "forecast."

2-4. What should we keep in mind when using the individual DIs?

For example, there are four kinds of DIs regarding supply and demand conditions and inventories: (1) supply and demand conditions for products and services ("excess demand" minus "excess supply"); (2) overseas supply and demand conditions for products ("excess demand" minus "excess supply"); (3) inventory level of finished goods and merchandise ("excessive or somewhat excessive" minus "insufficient or somewhat insufficient"); and (4) wholesalers' inventory level ("excessive or somewhat excessive" minus "insufficient or somewhat insufficient").

Among these, (3) asks enterprises their judgement on the inventory level of the "enterprise itself." On the other hand, (1), (2), and (4) ask the judgement on the supply and demand conditions or the inventory level of the "industry" in which the enterprise's main merchandise (or service) belongs.

Users are advised to keep in mind these differences in definitions (judgement on the "enterprise itself" or the "industry" it belongs to) when using these DIs.

Not the "level" but the "direction" of change is asked for the following three DIs: (1) change in interest rate on loans ("rise" minus "fall"); (2) change in output prices ("rise" minus "fall"); and (3) change in input prices ("rise" minus "fall").

Please note that the DIs of the Tankan generally indicate the "level," but those mentioned above are exceptions and indicate the "direction."

3. Q&A regarding the quantitative survey

3-1. What is a population estimate? How is it calculated?

The main purpose of the Tankan is to provide an accurate picture of business trends of enterprises in Japan, thereby contributing to the appropriate implementation of monetary policy. However, if we try to survey all enterprises (this is called a"complete survey"), not only is it a huge burden on all responding enterprises, but it also entails a vast amount of cost for the Bank of Japan to keep the information obtained from responding enterprises under tight control. Since considerable time is needed to aggregate and release the figures, it is difficult to grasp the actual condition of the economy on a timely basis.

Hence, samples are selected from the population enterprises under certain statistical criteria that have been set to target accuracy and other measuring instruments (as for the Tankan, they are private enterprises with capital of 20 million yen or more among those listed in "Establishment and Enterprise Census" by the Ministry of Internal Affairs and Communications). The sum of the replied figures of the samples is inflated according to the extractive ratio to produce the estimates for the aggregates of the overall population. The figures obtained using this method are the "population estimates" (A survey which uses the information obtained from samples to produce the estimates of the population is generally called a "sample survey").

An example calculating the population estimates

When 50 enterprises are selected as samples from a population of 200, and the simple aggregates in sales of the sample was 150:

Population estimate = (150/50) * 200 = 600

Which is:
(average sales per enterprise) * (number of population enterprises) = (estimate of sales of 200 enterprises)

For the quantitative survey of the Tankan, population estimates are calculated by industry and size (total of 397 strata), and these figures are aggregated to obtain the total population estimate.

3-2. How are missing figures--those which cannot be obtained from enterprises--treated on aggregation (tell us about the missing value imputation method)?

From the March 2004 survey, as for annual projections among the quantitative survey, the most recent figures obtained from the enterprise are substituted for the missing figures upon aggregation (missing value imputation) when figures are not provided by the enterprise.

When figures for the new fiscal year (FY2007) cannot be obtained, the most recent figures available (in this case FY2006) are substituted instead for aggregation.

When figures for the current fiscal year (FY 2007) cannot be obtained, figures of the current fiscal year used for aggregation at the previous survey are substituted instead.

Until the December 2003 survey (prior to revision), population estimates were calculated excluding figures of non-responding enterprises. As a result, the average figure of the stratum of population estimates to which the enterprise belongs is substituted for the missing figure upon aggregation.

In this case, the population estimates will diverge from the actual condition if there is a great difference between the average of the stratum and the true response (which were not actually obtained) of the non-responding enterprise.

With this in mind, we have decided to switch the substitution method to "substituting the most recent figures of the enterprise" from the March 2004 survey. It appears to be that for annual items, more accurate aggregates are likely to be obtained by using the new substitution method (see "Methodology for Handling Missing Values In TANKAN" <June 2002> for details).

3-3. How are outliers--those which greatly diverge from the rest of the data--treated on aggregation (tell us about the treatment of outliers)?

From the December 2010 survey, with respect to "sales," "current profits," "net income," "fixed investment," and "software investment," if a value reported from a sample enterprise greatly changes the rates of increases from the previous year or the rates of revisions from the previous survey for the population estimates and the value is detected as outliers, the value is not going to be included in the population estimates, for the value does not represent the population. Instead, the value will be treated in a certain way (treatment of outliers) to avoid its influence.

For example, when figures for the new fiscal year (FY2011) greatly diverge from the previous year (FY2010) and they are detected as outliers, the most recent figures available (in this case FY2010) are substituted instead for aggregation.

Additionally, when figures for the current year (FY2011) greatly diverge from the previous survey and they are detected as outliers, figures of the current fiscal year used for aggregation at the previous survey are substituted instead.

Please note that this treatment of outliers is a technical effort to enhance the statistical precision; it is very rare to have outliers in the Tankan. Therefore, this change affects neither the content of the released data nor the continuity of the figures.

For more specific information regarding the treatment of outliers, please refer to "Explanation of the Short-Term Economic Survey of Enterprises in Japan (Tankan)" or "Treatment of Outliers in Business Surveys: The Case of Short-term Economic Survey of Enterprises in Japan (Tankan)" (July, 2010).

3-4. What should we keep in mind when looking at the year-to-year percent changes and the revision rates of the Tankan?

In the Tankan, figures of each fiscal year are surveyed six times in total from the March survey of the previous fiscal year to the June survey of the following fiscal year. The figures (population estimates) of each fiscal year are fixed in the June survey of the following fiscal year.

For instance, as shown in the table below, figures for FY 200X-1 are fixed in the June 200X survey. Accordingly, the "year-to-year percent change" for the figures of FY 200X-1 is fixed along with the "denominator" to calculate the "year-to-year percent change" for the figures of FY 200X.

Therefore, regarding the "year-to-year percent change" of the figures for FY 200X, users should take into consideration that there is a difference between the "denominators" (figures of FY 200X-1) of the March 200X survey and the other surveys (June 200X survey to June 200X+1 survey).

"Numerators" and "denominators" to calculate the "year-to-year percent change" for figures of FYs 200X-1 and 200X.

The "revision rate" is calculated by comparing the"population estimates of the previous survey" and the "population estimates of the present survey" as shown below:

Revision rate (percent) equal (population estimates of the present survey -population estimates of the previous survey) / population estimates of the previous survey * 100

It should be noted that the following equation does not necessarily hold: "year-to-year percent change of the previous survey" plus "revision rate of the present survey" equal "year-to-year percent change of the present survey."

This is because, as shown above, there is usually a difference between the "denominators" used in calculating the "year-to-year percent change" of the March survey and those used in the other surveys. In the example shown below, the year-to-year percent growth is higher (lower) in the June survey compared to the March survey, but the revision rate of the June survey is negative (positive).

Example 1: Fixed investment of large manufacturing enterprises (FY 200X)
Table : Fixed investment of large manufacturing enterprises (FY 200X)
  March 200X survey   June 200X survey
Year-to-year chg. (%) +2.3 --------> +7.7
Revision rate (%) n.a.   -0.5
Example 2: Current profits of large manufacturing enterprises (FY 200X)
Table : Current profits of large manufacturing enterprises (FY 200X)
  March 200X survey   June 200X survey
Year-to-year chg. (%) +3.6 --------> -0.3
Revision rate (%) n.a.   +1.6
Actual calculation behind example 1:

Year-to-year percent change of the March survey = 10,595.8 billion yen (figures for FY 200X of the March survey) / 10,361.5 billion yen (figures for FY 200X-1 of the March survey) * 100-100 = 2.3%

Year-to-year percent change of the June survey = 10,547.2 billion yen (figures for FY 200X of the June survey) / 9,790.2 billion yen (figures for FY 200X-1 of the June survey) * 100-100 = 7.7%

Revision rate of the June survey = [10,547.2 billion yen (figures for FY 200X of the June survey) - 10,595.8 billion yen (figures for FY 200X of the March survey)] / 10,595.8 billion yen (figures for FY 200X of the March survey) * 100 = -0.5%

3-5. How is the "predicted exchange rate expected by enterprises" (Yen per U.S. dollar rate) calculated?

The predicted exchange rate is calculated based on the responses from enterprises ("exchange rates for exports" on the survey sheet). The individual rates are weighted by the value of exports (on a yen basis) of the enterprises upon aggregation, unlike DIs which are based on simple averages.

The predicted exchange rate by stratum of population estimates (among the 397 strata in 3-1., those belonging to manufacturing, wholesaling, and information services sectors) is calculated using the following formula. The overall predicted exchange rate is also calculated using these components.

On aggregating the predicted exchange rate, only figures of enterprises responding to both "exports" and "exchange rates for exports" are used.

Predicted exchange rate in the strata for population estimates (yen/dollar) = Population estimate of (exchange rate of the individual respondent * value of its exports <yen basis>) / Population estimate of the value of exports (yen basis)

Example: - A hypothetical case of 3 responding enterprises and 30 population enterprises

Enterprise A : exchange rate 115 yen/dollar, exports 50
Enterprise B : exchange rate 120 yen/dollar, exports 100
Enterprise C : exchange rate 125 yen/dollar, exports 150

Table : - A hypothetical case of 3 responding enterprises and 30 population enterprises
Predicted exchange rate = [(115 * 50 + 120 * 100 +125 * 150) / 3] * 30
  [(50 + 100 + 150) / 3] * 30
= 121.67 (yen/dollar)

3-6. What should we bear in mind when using data of "fixed investment?"

A revision pattern can be seen in the annual projections of fixed investment. For example, those of large enterprises are revised upwards from the first March survey to the December survey when looking to the averages of past surveys. This is because new plans which became concrete and plans uncompleted in the previous fiscal year are added as time proceeds from the first survey (March survey) to the December survey. After the December survey, however, fixed investment tends to be revised downwards towards the actual results (obtained in the June survey of the following year) because of delays in construction and postponement of plans to the following fiscal year.

On the other hand, many small enterprises do not make annual projections beforehand and thus their fixed investment tends to be recorded along with the actual implementation. Consequently, fixed investment of small enterprises is revised consistently upwards from the first survey (March survey) to the actual result survey (June survey of the following year) according to past averages.

Of course, these revision patterns are all merely past averages and there are cases which largely differ from these patterns. Nevertheless, when evaluating the figures of fixed investment plans, it is useful to pay attention to these typical revision patterns (Chart 1).

(1) Large Enterprises

Graphs of revision patterns of past surveys for annual projections of fixed investment of manufacturing, nonmanufacturing and all industries of large enterprises. The details are shown in the main text.

(2) Small Enterprises

Graphs of revision patterns of past surveys for annual projections of fixed investment of manufacturing, nonmanufacturing and all industries of small enterprises. The details are shown in the main text.

3-7. What should we bear in mind when using data of "software investment?"

Please bear in mind that "software investment" in the Tankan and "computer software" in the GDP are surveyed on a different basis. For details, see "Addition of 'software investment' and related change of release forms in Short-term Economic Survey of Enterprises in Japan, TANKAN" (March 2001).

"Software investment" is a new item introduced from the March 2001 survey. Responding enterprises are asked to provide "the amount (or the amount planned to be listed) of newly listed intangible assets among software investment." With Information Technology (IT) related investment becoming widespread in Japan, it has become necessary to include a survey on software, such as computer programming, in the fixed investment survey to capture the actual condition of the economy more accurately.

4. Q&A regarding the accuracy of the Tankan

4-1. Since the Tankan is a sample survey, there must be inherent statistical errors in its aggregated figures (population estimates). What kinds of errors are included in the figures of the Tankan?

In "sample surveys" such as the Tankan, two kinds of errors mainly occur which are "sampling errors" and "non-sampling errors."

For example, if the sample enterprises consist of only those that are larger than the average enterprise of the population, population estimates such as sales or fixed investment will be larger (overestimated) than the actual figures (aggregates obtained from a complete survey). This type of error, which is caused by sample biases, is called a "sampling error."

When responses cannot be obtained from the sample enterprises or when the responded figures are incorrect, the population estimate obtained may possibly diverge from the actual figure. Errors of this type are called a "non-sampling error." Thus, "non-sampling errors" occur not only in sample surveys but also in complete surveys.

4-2. What measures are taken in order to reduce the sampling errors?

The bank uses the "Establishment and Enterprise Census" of the Ministry of Internal Affairs and Communications to specify the population enterprises of the Tankan. The bank makes revisions to the sample enterprises of the Tankan; and the interval has been set to match that of the "Establishment and Enterprise Census" revision (note). The latest revision made by the bank took place in March 2010.

In each review, sampling errors are reduced under certain statistical criteria that have been set to target accuracy and other measuring instruments (different criteria applied to financial institutions). For details, see "Sample Design and Sample Maintenance of 'TANKAN'" (June 2004).

  1. (1) With respect to the six classifications, large, medium-sized, and small manufacturing enterprises and nonmanufacturing enterprises, the error ratios (ratios which indicate the deviation of the population estimate from the"actual figure" [standard error of the sample average/average of population]) of the population estimates in sales remain within the target range (3 percent for the manufacturing sector and 5 percent for the nonmanufacturing sector).
  2. (2) As for each industry classification, the error ratios of the population estimates in sales generally remain within the target range of about 10 percent.
  3. (3) The sampling ratio of each stratum of population estimates attains the target of about 1 percent or over in general.
  4. (4) The distribution of sample enterprises measured by capital and the number of regular employees does not differ significantly from the distribution of the population enterprises.

When revising the sample enterprises, enterprises are chosen so as to meet the above criteria. Upon revision, not all of the sample enterprises are replaced but new ones are added to the existing respondents (continued samples).

Even though sample enterprises are adequately revised, sampling errors may increase before the next revision due to decreases in the number of sample enterprises caused by, for example, bankruptcies or mergers. Therefore, the above statistical examination is conducted regularly on an annual basis, and if the accuracy declines, new sample enterprises are added at the March survey.

4-3. What measures are taken in order to reduce the non-sampling errors?

From the viewpoint of decreasing non-sampling errors, we are endeavoring to increase the response rate by asking the sample enterprises for their understanding and cooperation. (The response rate of the December 2009 survey was 99.1%, excluding financial institutions.)

We are making efforts to increase the response rate by allowing round figures when authorized figures are unavailable (for example, when the authorized forecast figures are not decided yet, we ask the respondent to fill in approximate figures).

Furthermore, we go through the responded sheets carefully to prevent false responses.

In cases when responses are still not obtainable despite the above efforts, we have been using the method of"missing value imputation" from the March 2004 survey in order to obtain more accurate aggregates (see 3-2. for details).

4-4. How does the Tankan incorporate mergers and spin-offs of enterprises which are increasing recently?

We basically take the following procedures when there are mergers or spin-offs among the sample enterprises in the Tankan.

Mergers

The core enterprise (the enterprise with the most capital) becomes the sample enterprise only when it is so prior to the merger. For instance, when there is a merger among sample enterprises, or when a sample enterprise merges with a non-sample enterprise with less capital, the enterprise after the merger becomes the sample enterprise. On the other hand, when a sample enterprise merges with a non-sample enterprise with more capital, the enterprise after the merger is no longer a sample enterprise (the sample enterprise is excluded from the sample).

Spin-offs

In principle, only the core enterprise (the enterprise with the most capital) after the spin-off is chosen as the sample enterprise.

Nevertheless, in addition to the core enterprise, the spin-off enterprises other than the core enterprise are included as sample enterprises "when a spin-off enterprise and the core enterprise are in the same stratum of population estimates after spin off" and "when the impact on the population estimates of sales and fixed investment would be reduced by incorporating the other spin-off enterprise."

From the March 2004 survey, we adopt the following two exceptional rules when there is a certain or more impact on population estimates of the Tankan (such as large-scale mergers and spin-offs). These are: (i) distribution method; and (ii) incorporating spin-off enterprises in the course of time. For details, see "Sample Design and Sample Maintenance of 'TANKAN'" (June 2004).

As corporate restructuring such as mergers or spin-offs is expected to intensify further, we are going to continue searching for better ways to accommodate these changes in the aim of maintaining and improving the statistical accuracy.

5. Q&A regarding measures taken to improve the transparency and users' convenience

5-1. Can you describe the main workflow until release?

For each survey, we provide the survey forms to the sample enterprises (currently about 10,000) about one month prior to the scheduled release date of the survey (in principle, at the beginning of April, July, October, and mid-December).

The answered survey forms are sent back either to the head office (Research and Statistics Department) or to the branches. After the answers of the returned forms are keyed into the aggregation system at the head office, they are scrutinized by the sections in charge. Phone calls are made to the respondents for inquires or confirmations if necessary.

At the head office, the answers are scrutinized again, and then the results are calculated.

From the viewpoint of security control, the aggregated results are strictly protected and not a single staff member is allowed access to the results before the day of release (see 6-2.).

5-2. How are the survey results of the Tankan released?

The lineup of released materials on the survey results and the corresponding media of release are as follows:

Released materials
  1. (1) Summary (a collection of main figures [available in Japanese and English])
  2. (2) Outline (a digest of representative figures extracted from the"Summary" [available in Japanese and English])
  3. (3) Figures by Industry (a collection of main figures by industry [available in Japanese and English])
  4. (4) Comprehensive data set(a complete set of detailed figures [available in Japanese and English])
  5. (5) Long-term time series data (a detailed time series data for the main figures [available in Japanese and English])
Media used for release
  • Internet website (provides materials from [1] to [5])
  • Information room of the head office (office hours: 8:50 to 17:00; provides materials from [1] to [3])

Material (4) is also available as a statistical periodical (users will be charged for this). For details, see List of Publications.

5-3. Apart from the survey results, what other related information is released?

As for the Tankan, in order to enhance the convenience of users and the transparency, not only the survey results but also related information is released as shown below. All of them are available on the Internet website (the English version is available on the website for [1], [2], [3], and some parts of [5]).

  1. (1) General Explanation of the Tankan
  2. (2) "Sample Design and Sample Maintenance of 'TANKAN'" (a paper explaining the details of the Tankan sampling)
  3. (3) Survey sheet of the Tankan (the survey sheet sent to enterprises)
  4. (4) Guideline and example on filling out the survey sheet (a note sent to enterprises together with the survey sheet [available in Japanese only])
  5. (5) Released material regarding the Tankan (announcements of revision, etc.)

5-4. Is the time and date of release of the Tankan decided beforehand?

In order to enhance the transparency, the release date of the Tankan is announced beforehand and the release times are all the same.

Together with other major statistics compiled by the Bank, the release date of the Tankan is announced on the Internet website at the end of June and December for the following one year. All surveys are released at 8:50 a.m.

5-5. Why is the Tankan released at 8:50 a.m.?

The Tankan is released just before the Japanese markets (monetary, foreign exchange, and stock markets) open for business at 9:00 a.m. (or the time when transactions become active). This is based on the policy that the results of the Tankan should be digested by the Japanese markets first.

5-6. Why are only the plain results of the Tankan released and why aren't there any explanations or comments on them?

On releasing statistics, we believe that it is essential to take a neutral stance and refrain from giving any interpretations or policy judgements on the aggregated results. We also believe that it is important to release the figures as soon as the aggregation is completed. Adding interpretations or judgements may delay this procedure. Based on this policy, we only accept questions from users (including the media) which are purely statistical (questions such as when is the last time such a growth rate occurred or whether there are any noises in the results caused by irregular factors).

Users may think this to be "unkind," but our policy is that "interpretations of statistics should first be made by the market or the public (including economists)" as this allows various interpretations.

We will continue to provide useful information on the Tankan, such as this FAQ, to promote its adequate use.

The official view of the Bank regarding the interpretations of the newly released statistics including the Tankan, and the judgement on the financial and economic conditions based on these interpretations, are shown in the Monthly Report of Recent Economic and Financial Developments, based on discussions made at the Monetary Policy Meeting of the Policy Board, and in the speeches and statements by the Governor.

5-7. What measures are taken in order to release the survey results earlier?

The Tankan has been released about one week earlier from the August 1996 survey (the August survey corresponds to the present September survey). This was made possible by the following two measures: (1) revision of the release material; and (2) termination of reporting the survey results to the board before release. (As a result, it now takes about one month from sending the survey sheets to releasing the survey results.)

From the March 1999 survey, "The Comprehensive Data Set" (paper format) has been released about two weeks earlier as a result of streamlining the workflow etc. Also, from the December 2000 survey, "The Comprehensive Data Set" (electronic format) and the "long-term time series data" have been released one business day earlier.

5-8. What measures are taken when errors are found in the released figures?

The revised data are compiled and released promptly in principle, when already released data need correction. However, the data may not be revised when responding enterprises revise their figures after release.

5-9. Where should we contact to ask questions about the Tankan?

The following sections will answer your questions about the Tankan during office hours on weekdays:

  1. (1) Public Opinion, In-House Tours, and Library, Planning and Coordination Division, Public Relations Department, the Bank of Japan (Tel : 03-3279-1111)
  2. (2) Business Survey, Economic Statistics Division, Research and Statistics Department, the Bank of Japan (Tel : 03-3279-1111, ext. 3816)

Comments on this FAQ and requests for new topics to be included are most welcome. Please send them via e-mail to: post.rsd5@boj.or.jp

6. Q&A regarding miscellaneous topics

6-1. How is the Tankan used in the process of monetary policy decision making at the Bank of Japan?

The monetary policy of the Bank is discussed and decided by the Policy Board at the Monetary Policy Meeting. At the meeting, discussions are made from a wide point of view based on various financial and economic data, and anecdotal information. The Tankan is one of the important information in making judgements. In other words, the Tankan is one of the major data sources, but monetary policy is not decided solely by the Tankan .

6-2. Under what kind of security system is the Tankan compiled?

The survey results prior to release and the figures of individual enterprises of the Tankan are under strict security control based on internal rules.

The entire work of each the Tankan survey is done in an area physically separated from other sections, and staff members other than those designated for the work are shut out from the area during the survey period. Confidential information is handled by a limited number of staff members and are kept locked for paper based materials and protected by passwords on access for electronic based materials.

Not a single person is allowed access to the survey results before the day of release, and even on that day, the number of people in charge of handling the material prior to release (released at 8:50 a.m.) is limited.

6-3. How can a company become a respondent of the Tankan? (Does the Bank of Japan accept applications from individual companies?)

As in 4-2., the sample enterprises of the Tankan are reviewed regularly. Furthermore, the statistical accuracy is examined each year; and sample enterprises are added if necessary. However, as sample enterprises are selected by the "random sampling" method from the population enterprises listed in "Establishment and Enterprise Census," individual companies cannot be automatically included in the sample even if they apply for it.

6-4. Is there a particular date by which private enterprises should complete and return the survey forms?

Yes, there is. Each survey period is approximately one month long (from the day we provide the survey forms to the release date of the survey). We usually set the date by which forms should be returned at two weeks after we provide the survey forms. This date is set so that there is a sufficient length of time for enterprises to complete the survey forms, and for us to perform procedures such as checking enterprises' responses.

A majority of the survey forms tend to be returned to the Bank of Japan within a few days before or after the target date.

We accept survey forms up to one business day prior to the release of the Tankan.