Sentiment among major Japanese manufacturers held steady in July, with the Reuters Tankan manufacturing index unchanged at +13 points, according to the latest Reuters Tankan survey released Wednesday.
The reading missed the consensus forecast of +14 tracked by Trading Economics.
It marked the 16th consecutive month that sentiment among manufacturers has remained in positive territory.
The poll, conducted from July 1 to July 10, drew responses from 218 of the 511 companies surveyed, Reuters said.
Non-manufacturers' sentiment softened more sharply, with the index falling to +25 from +32 the previous month, as firms cited rising cost pressures and concerns tied to the Middle East conflict, according to Reuters.
The flat manufacturing reading follows a stronger June, when the index climbed to +13 from +8, with chemicals and machinery makers leading the growth.
This month, the sustained positive sentiment was driven by confidence in the recovery of the semiconductor market, including in memory-related demand, Reuters said.
"Order volumes and values are at levels we've never seen before, and we're concerned about production capacity," a manager at a precision machinery maker was quoted by Reuters as saying.
The latest survey data came two weeks after the Bank of Japan published its latest poll data showing that business confidence in Japan surged to an eight-year high in June.
It further builds the case for another BOJ rate hike following the central bank's move to increase rates to a 31-year high of 1% in June.
Reuters said most analysts it polled expect the BOJ to raise rates again to 1.25% by the end of the year.
