The latest quarterly survey on Japanese business sentiment shows rising optimism, while new unemployment numbers also show more people going back to work.
Japanese business executives are more optimistic about the economy than they have been in 13 years.
The latest Bank of Japan confidence survey, known as the "tankan", shows the index rose to 22 in the most recent quarter. That was a jump from 12 in the first quarter of the year, and the highest since 1991.
Analysts say the figures indicate that companies are raising their investment plans and profit forecasts, which should eventually end Japan's six-year run of deflation.
Japan's seasonally adjusted unemployment rate hit a 45-month low in May. It dropped to 4.6 percent, down from 4.7 in April.
The Home Affairs Ministry says gains were seen in all age brackets. But some economists warn that the improved employment picture is not leading to a rise in disposable income because most of the new jobs are part-time and poorly paid.
Despite the upbeat economic news, some companies continue to struggle. One such company is Mitsubishi Motors, troubled by quality control and safety issues. At the automaker's annual meeting, chairman Yoichiro Okazaki bowed deeply before stockholders.
Mr. Okazaki says he sincerely apologizes and warns that the company remains in serious trouble. He promises that executives will do their utmost to try to revive the company.
Angry investors shouted questions about a recent defects scandal. A number of current and former Mitsubishi executives are under arrest as a result of a police probe into fatal accidents involving Mitsubishi trucks.
Several Japanese companies - such as Toshiba, NEC and Hitachi - are talking up prototypes of fuel cells the size of a human thumb. They predict the fuel cells will soon power everything from mobile phones to computer laptops.
Toshiba says it will begin putting the devices in its products next year.
Professor Kenichiro Ota, chairman of Japan's Hydrogen Energy System Society, says the tiny cells contain a flammable fuel source, so there are still some hurdles before they can be widely used.
"Most of these micro fuel cell is using methanol," he said. "So we have to think of a safety treatment of the methanol."
Experts also say the tiny fuel cells will need to prove to consumers that not only are they safe and cost effective, but will outperform traditional batteries.