• Kyodo

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Business sentiment among large Japanese companies in the July to September period turned positive for the first time in three quarters, as progress in COVID-19 inoculations lifted expectations for an economic recovery, a government survey showed Monday.

The confidence index covering firms with capital of ¥1 billion ($9.1 million) or more registered plus 3.3, up from minus 4.7 in the April to June period, according to the joint survey by the Finance Ministry and Cabinet Office.

The figures are calculated by subtracting the percentage of firms reporting worsening conditions from those observing improvements.

The index for manufacturers stood at plus 7.0, up from minus 1.4 in the previous quarter, turning positive for the first time in two quarters. Demand for products including chip-making equipment and semiconductors used for cars surged amid a global chip shortage, the official said.

The index for non-manufacturers, including accommodations and restaurants, became positive for the first time in three quarters as it rose to plus 1.5 from minus 6.2, with more people in Japan getting vaccinated.

The index was also bolstered by a recovery in fields such as advertising, rebounding from a plunge caused by the initial blow of the pandemic last year, the official said.

“Business conditions remain severe due to coronavirus infections,” a government official told reporters. “But the outcome likely reflected the fact that the economy has continued on a recovery trend, with firms’ sentiment enhanced as the vaccination campaign was promoted.”

Japan initially lagged behind other major economies in inoculating its people, but Yasutoshi Nishimura, minister in charge of virus response, said Sunday more than 50% of the country’s population has now been fully vaccinated and that the rate will soon catch up with major European economies such as Britain and France.

The survey covered 14,580 companies with capital of ¥10 million or more, with 11,143, or 76.4%, responding by Aug. 15. In mid-August, the nation was seeing increasing cases of daily new infections amid the spread of the highly contagious delta variant of the virus.

The index also turned positive for midsize companies with capital between ¥100 million and ¥1 billion, increasing to plus 0.2 from minus 9.0 in April to June.

The index for small firms capitalized at ¥10 million or more but less than ¥100 million remained negative at minus 18.0, but improving from minus 25.5 in the previous period.

Looking forward, the indices forecasting business conditions for large companies in the three months through December and the following quarter through March were both plus 6.8.

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