Business mood improves in Japan

Confidence has improved slightly in Japan, but firms are still struggling

Business confidence in Japan has improved for the first time in two-and-a-half years, according to the Bank of Japan's quarterly Tankan survey.

The confidence index for major manufacturers rose to minus 48 from a record low of minus 58 in March.

Factories have begun to come back to life, amid signs Japan may be through the worst of its steepest recession since World War II.

But overall, firms remained gloomy about the future, the survey showed.

Recent indicators for Japan's economy have been good, but so savage has been the recession that any improvement is from a very low level, says the BBC's Roland Buerk in Tokyo.

The latest Tankan survey, which canvasses more than 10,000 firms, shows business confidence has gone up after the record pessimism of three months ago.

However, Japan has been hit hard by falling global demand and a collapse in exports.

Companies have slashed production, laid off workers and cut hours. Now stocks of unsold goods are running down, they are starting to increase factory output again.

But economists say a fully-fledged recovery is unlikely until a sustained pick-up in demand in Japan's export markets, such as the US and Europe. And unemployment is expected to continue to rise, making shoppers in Japan reluctant to spend.