A new government survey shows that business sentiment among major Japanese firms has turned positive for the first time in three quarters.
The sentiment index reading for the July-to-September period was 3.3. That is up from minus 4.7 in the previous quarter.
A positive number means a majority of businesses think conditions have improved.
More than 10,000 companies responded to the survey conducted by the Finance Ministry and the Cabinet Office.
The index turned positive for both major manufacturers and non-manufacturers.
A global semiconductor shortage reflecting strong demand boosted confidence among production equipment manufacturers to 30.5.
The index for information and communication firms also rose to 8.5, thanks to growing advertising revenues.
Looking ahead, major companies expect sentiment to improve further in the October-December quarter, with the projected index rising to 6.8.
The Finance Ministry says progress in the coronavirus vaccination program is raising hopes for increased consumer activity and a resulting rise in sales.