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Business sentiment for the current quarter improved in the latest government survey, released Wednesday, although companies whose conditions had deteriorated still outnumbered those whose had improved.

The Finance Ministry said in its business outlook survey that the April-June business sentiment index for large companies, capitalized at 1 billion yen or more, improved to a seasonally adjusted minus 8.6 from a revised minus 21.5 for the previous quarter.

While the index has improved for two consecutive quarters, it has remained in negative territory for five straight quarters.

“The sentiment has been improving every quarter, and I think the survey” shows it has bottomed out, a ministry official said.

The index represents the difference in terms of percentage between companies reporting improved business conditions and those reporting a deterioration.

Regarding companies’ projections for the next two quarters, the index for the July-September term registered minus 2.5, while that for the October-December period moved into positive territory, at 4.1.

The index for large manufacturers for the April-June quarter improved substantially, to minus 3.5 from minus 28.1 in the previous quarter, with a further improvement to minus 0.1 in the July-September quarter and a jump into positive territory at 8.5 in the October-December quarter.

The index for midsize firms, capitalized at between 100 million yen and 1 billion yen, rose to minus 17 for the April-June quarter from minus 29.1 in the previous quarter, while that for smaller firms improved to minus 37 from minus 40.5.

The survey was conducted in May and covered 10,746 companies, of which 8,661, or 80.5 percent, responded.

The companies expect a better showing in the second half of the current business year, forecasting increases in sales and pretax profits, along with improvements in the job situation.

Sales in all industries are expected to increase 2 percent from a year earlier in the October-March half, following a 2.2 percent fall in the April-September period, according to the survey.

Pretax profits are expected to increase 26.6 percent in the latter half of the year after increasing 2.7 percent in the first half.

The ministry said its business outlook survey and the Cabinet Office’s investment survey of incorporated enterprises, both of which gauge business confidence on a quarterly basis, will be integrated into a new quarterly business sentiment survey from 2004.

The new survey is aimed at assessing business confidence more precisely by expanding coverage to about 15,000 firms, the ministry and the Cabinet Office said.

It will also cover sales and capital investment data, they said.

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