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Japanese Business Sentiment on the Upswing - 2002-07-01

The Bank of Japan has released its quarterly Tankan survey showing business sentiment is on the upswing as the country begins to emerge from recession. But pessimistic executives continue to outnumber optimists.

The Japanese central bank's Tankan survey shows that business confidence scored a record rise last quarter, powered by large manufacturers.

The Tankan measures the business mood by comparing how many firms believe economic conditions are favorable to those that don't. The index for big manufacturers rose for a second straight quarter to minus 18 from minus 38 in March. That is the best quarterly jump in the Tankan's 28-year history.

But the index remains in the negative numbers, meaning pessimists still outnumber optimists.

Tomoko Fujii, an economist at Nikko Salmon Smith Barney, said "the results were much better than expected and confirm an export-led recovery. So the economy is probably in better shape. But that does not guarantee continued expansion for the future. There are some concerns shown in the Tankan survey and that is why our longer-term pessimism does not change."

Despite recent signs that Japan is emerging from its deepest post-war recession, corporate executives say slower growth in the United States, its biggest overseas market, is a major concern.