Confidence among major Japanese manufacturers edged down in the three months to December, a quarterly central bank survey showed Monday, underscoring the lacklustre state of the world's third largest economy.
The Bank of Japan's closely watched Tankan survey showed confidence among large manufacturers stood at plus 12 against plus 13 in the September survey.
Economists had expected the reading would stay flat, according to a survey by the leading business daily Nikkei.
Confidence among non-manufacturing companies rose to plus 16 from plus 13, delivering mixed news to Prime Minister Shinzo Abe's ruling coalition that scored a big win in Sunday's snap elections.
"Today's Tankan survey suggests that Japan's economy stabilised in the fourth quarter, but a rapid recovery is not on the cards," Marcel Thieliant, Japan economist at Capital Economics, said in a note.
The Tankan survey of more than 10,000 companies -- marking the difference between the percentage of firms that are upbeat and those that see conditions as unfavourable -- is the most comprehensive indicator of how Japan Inc. is faring.
The central bank's report came after government data showed the world's third largest economy shrank 0.5 percent quarter-on-quarter in the three months to September following a 1.7 percent contraction in the June quarter.
The two consecutive quarters of negative growth met a common definition of a recession.
Abe over the past two years has pressed ahead with a pro-spending growth bid, dubbed "Abenomics", which boosted stock prices and pushed the yen down.
Abe moved ahead with a sales tax hike in April, Japan's first in 17 years, which slammed the brakes on consumer spending.