• Kyodo

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Sentiment among large Japanese companies improved for the second straight quarter in the October-December period, reflecting increased business activity amid a drop in coronavirus infections in the country, a government survey showed Thursday.

The confidence index covering firms capitalized at ¥1 billion ($8.8 million) or more hit 9.6, up 6.3 points from the July-September period to hit its highest since the fourth quarter of 2020, according to the joint survey by the Finance Ministry and Cabinet Office.

The figure stayed positive for the second quarter in a row.

There was also a big improvement in sentiment at midsize firms, with the index for companies capitalized at ¥100 million or more but less than ¥1 billion jumping to 10.7 from 0.2 in the previous quarter to reach its highest level since comparable data became available in the April-June quarter of 2004.

The reading for small firms capitalized at ¥10 million or more but less than ¥100 million remained negative for the 31st successive quarter but was at its highest in four years, improving to minus 3.0 from minus 18.0.

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

“With the severe situation caused by the impact of virus infections gradually easing, the survey results showed that (the economy) has been picking up, although some fields remain weak,” a government official told reporters.

On the back of the government’s COVID-19 vaccine rollout, the number of new infections has remained low following a fifth wave of cases over the summer, leading to a gradual lifting of restrictions on economic activities.

For large firms, the index for manufacturers stood at 7.9, up from 7.0 in the previous quarter, underpinned by brisk demand for chipmaking equipment, production machinery for cars and semiconductors, according to the official.

The index for nonmanufacturers soared to 10.4 from 1.5, the highest since 12.8 was logged in January-March 2014, as customers of hotels, restaurants and entertainment facilities increase, the official said.

Both indices remained positive for the second consecutive quarter.

Looking ahead, the index forecasting business conditions for large companies in the three months through March was 7.2, and that for the following quarter stood at 3.8.

The survey covered 14,492 companies capitalized at ¥10 million or more, with 11,282, or 77.8%, responding by Nov. 15. The official said the latest results do not reflect concerns stemming from the emergence of the omicron variant.

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