A government survey shows business sentiment at major Japanese companies remained positive for the second straight quarter. The trend is attributed to stronger demand in the semiconductor and service industries.
The index of business conditions stood at 5.1 for the July-September period.
A positive figure indicates a majority of companies believe business is improving.
About 11,000 companies responded to the quarterly survey by the Finance Ministry and the Cabinet Office.
The index for manufacturers came in at 4.5 thanks to increased demand for semiconductors, among other factors.
The figure for non-manufacturers reached 5.4, as restaurants and hotels reported an increase in customers. They also reported progress in passing on rising costs in prices.
Finance Ministry officials say the results reflect a moderate recovery in the economy. However, they added that downside risks remain in the global economy and the influence of price hikes will need to be closely watched.