Japanese business confidence on the up

Japanese companies remain deeply pessimistic, but confidence is starting to improve from record lows last quarter, a key central bank survey showed today.

In the Bank of Japan's quarterly "tankan" survey for June, the closely watched sentiment index for large manufacturers stood at minus 48.

Three months ago it hit minus 58 in the sixth straight quarter of decline and the worst reading ever.

The latest reading marks the first upturn in 2½ years but misses an average forecast of minus 43 in a survey of 11 economists.

The figure represents the percentage of companies saying business conditions are good minus those saying conditions are unfavourable. The lower the number, the greater the pessimism.

The sentiment index for big non-manufacturers rose to minus 29 from minus 31 in March.

Like its Asian neighbours, Japan's economy relies heavily on exports and was hit hard by the unprecedented drop in global demand triggered last year by the financial crisis.

The country's biggest corporate names, including Toyota Motor Corp and Sony Corp, responded by aggressively cutting production, stockpiles and jobs.

Leaner manufacturers are now working on replenishing inventories to meet an upturn in overseas demand. Massive government stimulus spending around the world, particularly in China, is helping fuel sales of cars, equipment and machinery.