Some gloom lifted from corporate Japan in the three months to December but not enough to dispel worries that the country's weak economic recovery has peaked.
The Bank of Japan's quarterly "tankan" survey of business sentiment released today showed the diffusion index for big manufacturers at minus nine, a marked improvement from minus 14 in September and better than a Reuters poll forecast of minus 13.
But the third straight rise in sentiment for big manufacturers did little to change the view held by most economists that the world's second-largest economy remains stagnant after emerging from recession early this year.
The main sentiment gauge, measuring the percentage of big manufacturers reporting unfavourable conditions against those that say they are favourable, scored a record rise in June, when strong demand for Japanese exports fuelled expectations.
The latest survey revealed a more sombre outlook.
Sentiment at big non-manufacturers worsened to minus 16 from minus 13, while large firms plan to cut capital spending by 6.8 per cent in the year to March, worse than a 6.2 per cent fall seen in September and market forecasts of a 6.5 per cent drop.