The Bank of Japan’s quarterly “tankan” survey shows an improved outlook for the world’s third largest economy.
The survey released Monday indicated growing shortages of factory capacity that could drive manufacturing investment to help drive growth.
However, economists said longer term forecasts were less upbeat, and overall growth looks set to remain at current steady but lackluster levels.
Another survey, the Nikkei purchasing managers index, showed factory output and new orders accelerating. Hiring also expanded, but at a slower pace, as did prices for manufacturing inputs.
The survey rose to a four-month high of 52.9 on a 0-100 scale where readings above 50 signify expansion.
Last month, Japan downgraded its economic growth estimate for April-June to an annualized rate of 2.5 percent, down from the 4.0 percent reported earlier.