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Business sentiment among workers with jobs sensitive to economic fluctuations rose in March to the highest level since August 2001, the government said Thursday.

It said the result signals that the ongoing economic recovery is now spreading to small companies and regional areas.

The diffusion index of confidence among so-called economy watchers over the current state of the economy climbed 3.6 points from February to 53.7, the highest reading since the government increased the number of workers surveyed to 2,050 from 1,500 in August 2001.

Respondents in eight of 11 regions in Japan, including Tohoku, Chugoku and Kyushu, showed the most upbeat economic confidence in March since August 2001, leading the Cabinet Office to say that the economic recovery is broadening.

The index is based on whether respondents see economic conditions improving or worsening in comparison with three months earlier. A reading of 50 shows that respondents — including taxi and truck drivers, department store sales staff, and restaurant and shop owners — generally believe economic conditions are flat.

Looking ahead, the index for economic conditions in the coming few months was 53.6, unchanged from February and also the highest since August 2001, the survey showed.

As for the current state of the economy, the index for household spending gained 3.3 points to 51.4 and the index for corporate activity increased 4.1 points to 55.4, with that for manufacturers up 4.6 points to 57.7 and that for nonmanufacturers up 3.6 points to 54.1. The index for employment moved up 4.2 points to 65.1.

The index for the restaurant sector jumped 9.9 points to 51.2 after falling for two consecutive months, indicating sales of beef and chicken have picked up after consumers digested negative news about mad cow disease and bird flu.

As for the economic outlook, the index for household spending dropped 0.8 point to 52.2, while the index for corporate activity rose 1.9 points to 53.6 and that for employment grew 1.4 points to 63.1.

The Cabinet Office surveyed 1,826 workers nationwide between March 25 and 31.

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