While business sentiment among Japan’s large manufacturers in the July-September quarter was the highest in more than 13 years, the future looks far from rosy.

The widely watched “tankan” quarterly survey released Friday by the Bank of Japan shows that manufacturers are uncertain about the next three months due to surging crude oil prices — indicating the country’s economic recovery might be finally running out of steam, economists said.

The quarterly survey showed that the business confidence index for large manufacturers improved to 26 from 22 in June, the sixth consecutive quarterly rise. The index represents the percentage of companies reporting conditions are good minus those reporting otherwise.

The September tankan figure is the highest since May 1991, when the index stood at 33.

“Good sentiment is spreading to broader sectors,” said Katsuhiro Oshima, economist at Mitsubishi Research Institute.

China’s expanding economy bolstered sentiment in the steel, nonferrous metal and chemical sectors, while better personal spending improved sentiment for nonmanufacturers, including the service industry, Oshima said.

The index for large nonmanufacturers rose to 11 in September from 9 in the previous quarter, up for the fourth consecutive quarter.

The tankan shows smaller businesses are also experiencing a recovery.

The index for small manufacturers rose to 5 in September from 2 in June. That for small nonmanufacturers improved to minus 17 from minus 18.

But outlooks were cloudy.

The index of large manufacturers’ forecast for the next three months is 21. That for large nonmanufacturers is 10, showing the first weaker outlook in 11 quarters.

“Worries about the future appeared clearly,” said Hideki Matsumura, senior economist at Japan Research Institute.

He said it is highly probable the economy will slow down from the start of 2005, although it is expected to stay on a recovery track.

Economists said the biggest concerns about the future are the surging crude oil prices, which rose above $50 a barrel earlier this week, and a slowdown in exports.

A rise in oil prices might dent related industries, including chemicals, automakers and airlines, they said.

High oil prices would also cool the U.S. economy, which might slow Japan’s exports — a major drive for Japan’s economic recovery, they said.

In the September survey, the index showing overseas demand of large manufacturers declined to 1, against 3 in the previous survey. It was the first decline in almost three years.

The BOJ sent survey questionnaires to 10,312 companies nationwide and received responses from 97.4 percent of them between Aug. 24 and Sept. 30.

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