Business confidence at major Japanese manufacturers improved as they pushed to recover from disaster, the central bank said on Monday.

In the Bank of Japan’s quarterly “tankan” survey of business sentiment, the main index for big manufacturers rose to 2 from minus 9 three months ago. The result was in line with market expectations.

The figure represents the per centage of companies saying business conditions are good minus those saying conditions are unfavourable, with 100 representing the best mood and minus 100 the worst.

The March earthquake and tsunami disrupted manufacturing supply chains nationwide, leading to critical parts shortages for sectors such as automobiles and electronics. That resulted in a sharp deterioration in confidence, which sent the main tankan index to its lowest level in more than a year.

But factories have put supply chain worries largely behind them now. Industrial production data last week showed that output had almost nearly recovered to pre-quake levels.

The mood among big non-manufacturers also climbed into positive territory to 1 from minus 5 in June.

Smaller enterprises improved as well, though they weren’t feeling quite as optimistic. The confidence index for medium-sized manufacturers rose to minus 3 from minus 12. The small manufacturers’ index stood at minus 11 from minus 21.

The tankan offered a mixed picture of the future, reflecting current uncertainties about the global economy, a strong yen and a lacklustre economy.

The survey forecasts business sentiment among large manufacturers to rise to 4 over the next quarter. Medium-sized manufacturers also expect a slight improvement. But small manufacturers and non-manufacturers predict business conditions to either stay flat or deteriorate.

The tankan, which helps guide monetary policy, showed that large companies overall plan to boost capital spending by 3 per cent this fiscal year through March 2012. The figure is down from 4.2 per cent in the June survey.

The Bank of Japan surveyed 10,910 companies nationwide. About 99 per cent responded.

The bank’s next policy board meeting is scheduled for Thursday and Friday.

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