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The government downgraded its assessment of domestic business confidence on Thursday, reporting that confidence deteriorated in the July-September period from the previous quarter.

The business survey index fell to minus 22 in the reporting quarter, having stood at minus 14 in the April-June quarter, marking a first decline in four quarters, the Cabinet Office said.

The index stayed in the minus column for a seventh straight quarter.

“We observe the deterioration of business confidence is coming to a halt, but we need to monitor the situation more closely because of uncertainties over domestic and overseas demand,” remarked a senior official of the Cabinet Office.

The office said in the previous survey that “an observation of the movements of the index shows an improvement in confidence.”

According to the previous survey, the index for the July-September quarter was projected at minus 4, while that for the October-December period was forecast at plus 12.

According to the latest survey, the index for the October-December quarter is forecast at minus 15, while the index for the January-March quarter is forecast at minus 1.

With the forecast having been downgraded substantially, the official said the margin of decline is unlikely to shrink much in the near future.

“The environment surrounding companies is not improving, and we need to watch it carefully,” he said.

The survey shows a substantial deterioration in the sentiment of electrical machinery manufacturers and steelmakers.

The transport machinery sector was the only manufacturing sector to show an improvement in business confidence.

The BSI is designed to measure corporate managers’ confidence in the economy. It is calculated by subtracting the percentage of those who predict it will deteriorate from those who say it will improve.

The Sept. 25 survey was submitted to 4,561 firms capitalized at 100 million yen or more, of which 4,227, or 92.7 percent, provided valid responses.

The official said concerns over the strength of exports were mounting and that share prices were falling at the time the survey was conducted.

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