Large companies with a positive business sentiment in the January-March quarter outnumbered their negative counterparts, but the employment outlook remained negative, according to a Finance Ministry survey released Thursday.
The seasonally adjusted business sentiment index for companies capitalized at 1 billion yen or more edged down to 5.1 from 5.3 in the October-December quarter.
But a ministry official said the decrease was a reflection of a sharp improvement in the last quarter, which drove the index into the plus column for the first time in 11 quarters.
The index is compiled by subtracting the percentage of companies reporting deteriorating business confidence from those reporting improvement.
The gauge for major manufacturers eased to 9.4 from 10.4, while that for major nonmanufacturers slipped to 2.2 from 2.9.
Meanwhile, the index for employment at large companies improved in the reporting quarter to minus 0.7 from minus 2.9, but it has remained in the minus column since the October-December quarter of 1992.
The index is calculated by subtracting the percentage of companies reporting they have a surplus of workers from those reporting a shortage.
Looking ahead, the survey found that the business sentiment index for major companies will rise to 8.7 in the April-June quarter, with figures of 12.3 for manufacturers and 6.3 for nonmanufacturers.
The employment index is projected to improve slightly to minus 0.6 for major companies, signaling that restructuring is still under way at leading firms.
The index is expected to swing back to a positive 0.4 reading in the July-September quarter.
Private-sector economists welcomed the improving trend in the employment situation, spurred by a solid recovery in the economy.
“It’s encouraging that the employment situation in Japan shows signs of improvement after a decade of slump,” said Tom Kirchmaier, a lecturer in management at the London School of Economics and Political Science.
“But Japan faces two major challenges in ensuring sustainability in the ongoing recovery — weakness in the U.S. dollar ahead of the presidential election in November and unfinished corporate restructuring.”
The business sentiment indexes for smaller companies, although improving, failed to climb out of negative territory.