Business confidence among large companies remained positive for the second consecutive quarter in the July-September term, the government said Monday.

The index gauging business conditions at large companies capitalized at 1 billion yen or more came to 9.6, up 2.4 points from the April-June period, the Cabinet Office and the Finance Ministry said in their joint quarterly survey.

The index is compiled by subtracting the percentage of companies reporting deteriorating business conditions from the percentage of those reporting improvement.

Government officials attributed the positive reading to brisk sales of digital electronics products such as DVD recorders and liquid-crystal televisions due to the Athens Olympic Games.

But the July-September index for large companies fell short of the 12.2 reading projected in the previous survey.

The business confidence index came to 2.8 at midsize companies capitalized at 100 million yen to less than 1 billion yen, marking a turnaround from the minus 2.4 reading registered in the April-June period.

The index at small companies capitalized at 10 million yen to less than 100 million yen stood at minus 17.8, up from minus 23.1 marked in the previous survey.

The indexes for midsize and small companies also fell short of their respective forecasts of 8.4 and minus 13.6, the government said.

The worse than expected figures could be taken as a sign that the pace of the economic recovery has slowed, though a Cabinet Office official did not support this view.

"Various factors such as typhoons and higher crude oil prices were behind the downward revisions," the official said, adding that the overall upbeat business sentiment remains unchanged.

Looking ahead, large and midsize companies believe their business conditions will improve.

The index for large companies stands at a projected 9.5 for the October-December quarter and at 8.5 for the 2005 January-March quarter.

The index for midsize companies is projected at 9.9 in the October-December quarter and 3.7 for the January-March quarter.