Japan's battered $5 trillion economy is back on the road to Wellville – or so believes the nation's ultra-cautious business community.

The September 'business conditions' diffusion index for large manufacturers (featured in the Bank of Japan's quarterly tankan survey of corporate sentiment) rose four points to 26 from 22 in June, bettering by three points economists' consensus forecast of 23 points.

The figure of 26 is the highest since 1991, prior to the stock market and property bubbles inflating to bursting point.

The index is calculated by taking the percentage of large companies that believe the business climate to be improving, then deducting from that figure the percentage that think they are worse.

The recovery trend appears to be spreading across all sectors, accompanied by an improvement in domestic demand. The September tankan results show sentiment up across all sectors and company size – manufacturers and non-manufacturers alike.

Data sourced from Financial Times; additional content by WARC staff