Japan's struggling economy may have narrowly avoided a summer contraction, government data showed today, but economists remained mostly pessimistic.
Business activity crept up for a second straight month in August, according to a key government index, and demand for services also rose as consumers made their summer purchases after two months disrupted by bad weather and soccer's World Cup.
The all-industries index, widely regarded as a close proxy to gross domestic product, rose 0.5 per cent in August from the previous month on a seasonally adjusted basis, the Ministry of Economy, Trade and Industry (METI) said.
A separate index released by the Cabinet Office showed consumer confidence edged up 0.3 point to 39.6 in September on a seasonally adjusted basis from June, but the government noted that the gains were shrinking and downgraded its assessment.
The latest data came as financial markets await a report on banks' sour loans that could herald radical reform in the world's second-largest economy.
A tough approach to the bad-debt crisis could pile on the pressure for weaker firms and raise already record-high unemployment levels, putting a further brake on the economy, which ended its longest post-war recession this year.