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Big Japanese firms' sentiment improves in July-Sept.

Tokyo's Ginza district (File photo, Kyodo)

TOKYO (Kyodo) -- Business sentiment at large Japanese companies improved in the three months through September from the previous quarter and is likely to remain strong amid robust capital spending, a government survey showed Wednesday.

The confidence index covering firms capitalized at 1 billion yen ($9 million) or more came to 3.8 in the third quarter of 2018, up from minus 2.0 during the April-June period, the joint survey by the Finance Ministry and the Cabinet Office showed.

Massive flooding caused by torrential rain in western Japan earlier this summer, which resulted in some supply chain disruptions, did not significantly dented sentiment, a ministry official said.

The survey also showed that despite risks including an escalating trade dispute between the United States and China, the world's two biggest economies, large companies are optimistic about the coming quarters.

The index forecasting business conditions in the three months through December stood at 7.6, while that for the following quarter was 5.8.

The indexes are calculated by subtracting the percentage of firms reporting worsening conditions from those observing improvements. They are based on valid answers provided by 13,075 companies as of Aug. 15.

Sentiment in the manufacturing sector was shown to be particularly strong thanks to improvements in companies that provide components and equipment for electronic parts increasingly used in cars.

Companies across all sectors and sizes said they plan to increase capital spending during the current fiscal year through March by 9.9 percent compared to the previous year, with commonly cited reasons including a ramp up in production capacity and streamlining of operations to cope with a labor shortage.

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