Core Viewpoint - The Japanese service industry sentiment index showed a strong recovery in October, reaching 49.1, significantly up from the previous value of 47.1, marking the highest level since March 2023 and exceeding market expectations of 47.6 [1] Economic Indicators - The household budget trend index also displayed positive changes, with retail and other service sectors' growth effectively offsetting declines in housing-related spending, leading to a stabilization in overall household consumption willingness [1] - The economic outlook index surged to 53.1 in October, up from 48.5, achieving the highest reading since July 2023, indicating a notable increase in confidence among businesses and households regarding future economic trends [1] Business Activity - Both manufacturing and other non-manufacturing sectors expanded simultaneously, driving an acceleration in the business trend index [1] - Employment conditions improved, reflecting a sustained recovery in labor market demand [1]

Group 1 - The overall business sentiment in Singapore has turned conservative, with the proportion of companies expecting economic deterioration rising from 22% in Q4 2024 to 40% in Q1 2025. The Business Sentiment Index (BSI) score is 56.5 [1] - The service industry shows the lowest sentiment, with the BSI score for the hotel, restaurant, and accommodation sector at 52.2, indicating significant pessimism across revenue expectations, profitability, expansion willingness, capital investment plans, and growth confidence [2] - Companies across various sectors anticipate rising costs, with the real estate and hotel sectors showing the highest cost expectation scores of 78.4 and 71.9, respectively [3] Group 2 - The financial and education sectors exhibit relatively optimistic sentiments, with BSI scores of 61.2 and 60.5, respectively. These sectors also lead in profit expectations and business expansion outlook [4] - A significant 52% of companies are actively pursuing digital transformation and process optimization, while 49% have initiated employee skill enhancement programs. However, challenges such as high technology application costs and staffing issues during training persist [5] - Liquidity and financing issues are critical, with 22% of companies facing moderate to high credit tightening. 35% of companies report cash flow may not sustain normal operations for 3 to 6 months, and 27% have sought financing in the past year, primarily for business expansion [5]

Core Viewpoint - The Bank of Japan has lowered its economic and inflation outlook due to increasing uncertainties, particularly related to trade policies, but still expects potential inflation to gradually approach 2% in the latter half of the forecast period [1] Economic Outlook - The Bank of Japan has adjusted its economic forecasts downward in response to rising uncertainties [1] - The central bank anticipates that potential inflation will move closer to 2% during the second half of the forecast period [1] Inflation Expectations - Despite the downward revision, the Bank of Japan maintains a positive outlook for inflation, expecting it to gradually align with the 2% target [1]