Corporate-earnings reports for fiscal 1999, which ended March 31, provide further evidence of a budding recovery in the corporate sector. Most of the companies listed on the Tokyo Stock Exchange posted their first net profit increase in three years. On a consolidated basis, pretax profits surged an estimated 25 percent in all industries except financial services, although sales either remained flat or dropped slightly.

The profit surge is attributed mainly to the brisk expansion of exports, particularly to Asian markets, and to the strong growth of high-tech companies supported by information-technology investment. Cost cuts from restructuring, such as layoffs, also contributed significantly to the profit gains.

Prospects for fiscal 2000, which will end next March, look brighter still. The upward trend in earnings is expected to gain momentum, while the slump in sales is predicted to give way to a gradual expansion. The hope, of course, is that the earnings recovery in the corporate sector will lead to a self-sustaining economic recovery supported by the two main engines of private-sector growth: business investment and consumer spending.