Japan’s Reuters Tankan manufacturers’ index fell to +8 in October from +13 in September (−5 ppt MoM), its first drop in four months — reflecting rising costs and tariff pressures.

• Manufacturers’ index: +8 (Oct) vs +13 (Sep), −5 ppt MoM and the weakest reading since July; respondents expect it to slip to +4 by January.

• Auto & transport machinery: +9 (Oct) from +33 (Sep), −24 ppt MoM. This was the largest fall and notable because the sector accounted for roughly a third of U.S. exports and about 8% of employment.

• Non-manufacturers: +27 (unchanged). Firms project a slight dip to +26 by January; the retail subindex improved to +27 from +20, aided by recovering urban sales and inbound tourism.

• Cost pressures: Numerous respondents cited rising input costs — raw materials, labour and energy — and said not all increases can be passed on to customers.

• Trade policy / tariffs: Managers flagged the impact of U.S. tariffs (including a 15% tariff noted for some auto-related trade) and additional tariff costs on steel and aluminium as weighing on outlooks.

• Demand / competition: Several firms pointed to weaker overseas demand — including China’s slowdown — and increased competition from low-cost imports; five of nine manufacturing sub-indexes fell in October.

• The Reuters Tankan drew on ~500 firms (237 responses, survey 24 Sep–3 Oct). A separate Japan Center for Economic Research poll of economists expects a likely −1.1% annualised Q3 GDP contraction, reflecting sagging external demand.