Confidence among manufacturers has remained near a four-year low as the global financial crisis threatens to smother demand in Japan's export markets and higher raw materials costs erode profits.
Sentiment among manufacturers was minus 10 points this quarter compared with minus 15.1 points three months earlier, according to survey results released Wednesday by the Cabinet Office and Finance Ministry. A negative number means pessimists outnumber optimists.
Economists say Japan is on the verge of a recession and probably won't recover until next year as exports weaken and rising prices at home discourage consumers from spending. Market turmoil spurred by Lehman Brothers Holdings Inc.'s bankruptcy may prolong the slump by cooling overseas demand for Japanese goods further.