An index measuring business sentiment in Japan surged in the second quarter of 2012, the Bank of Japan revealed on Monday in its quarterly Tankan business survey - as a weaker yen boosted expectations of an economic recovery.
The survey is closely watched by the Bank of Japan for formulating policies.
Improved sentiment largely reflected the recent depreciation of yen, as a result of bold policy actions by the government led by Prime Minister Shinzo Abe - a strong advocate of aggressive monetary easing who has pledged to end deflation to fuel economic recovery.
Bank of Japan governor Haruhiko Kuroda, who shares Abe policy views, has vowed to attain 2 percent inflation within two years. Further, expectations of more monetary stimulus from the BoJ also appeared to have bolstered business sentiment.
The large manufacturers index came in with a score of 4, beating forecasts for a 3 and up from -8 in the first quarter. The outlook score was 10, also beating expectations for a 7 and up from -1 in the previous three months.
The large non-manufacturers index was at 12, surpassing expectations for 11 and up from 6 in Q1. The outlook score was 12 versus forecasts for 14 and up from 9 in the three months prior.
The medium-sized manufactures index saw a score of -4, up from -14 in the first quarter and with an outlook of -3 for Q3. Medium-sized non-manufacturers came in at 7, up from 4 in the previous three months and with an outlook of 7.
The index for small-sized manufacturers came in at -14, up from -19 and with an outlook of -7. Small-sized non-manufacturers were at -4, up from -8 and with an outlook of -4.
Large all-industry capex is now seen at 5.5 percent, well above forecasts for 2.9 percent after falling 2.0 percent in the previous quarter.
The sentiment indexes are derived by subtracting the percentage of respondents who say conditions are poor from those who say they are good. A positive reading means optimists outnumber pessimists.
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