The business environment for small and medium-size companies is way off the recovery path, though slight improvements were seen in August, according to a survey released Wednesday.

According to the Japan Finance Corp. for Small Business poll, the number of small firms that reported sales gains in August compared with the previous month outnumbered those reporting lower sales for the first time in three months.

The index of business sentiment based on actual sales rose to -26.2 in August from -28.6 in July, and the index of business sentiment for sales in the coming three months rose to -21.2 in August from -21.8 in July, the survey shows.

The indexes are tallied by subtracting the percentage of companies reporting or forecasting sales falls from those who see gains. August’s showing, however, is hardly a sign of recovery, the officials said; the sentiment index on actual sales has been in negative territory since December 1996.

Although consumers’ demand for clothes and government orders for construction showed slight improvements in August, those were offset by decreasing demand for automobiles and housing, the officials said.

Meanwhile, the index of business sentiment on bank lending fell to -11.7 in August from -11.2 in July, suggesting that banks have tightened their grip on credit.

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