Japanese business confidence improved in the three months to September after it sagged following a sales tax hike in April, a quarterly study from the Bank of Japan showed Wednesday.
The Tankan survey showed confidence among large manufacturers stood at plus 13, up by one point from the previous quarter, against the market forecast of plus 10.
The business sentiment index marks the difference between the percentage of firms that are upbeat and those that see conditions as unfavourable.
The Tankan reading for large companies in the non-manufacturing sector, however, tumbled to plus 13 from plus 19 in the June quarter.
Business sentiment turned upbeat after Prime Minister Shinzo Abe took office in late 2012 on a pledge to kick-start the world's number-three economy, hitting a more than six-year high plus 17 in the March quarter.
But the reading slumped in the three months to June, after Abe moved ahead with a consumption tax hike in April, throwing into question the strength of Japan's recovery.
The closely watched survey of more than 10,000 companies is the most comprehensive indicator of how Japan is coping with the impact of the nation's first sales tax rise in 17 years.