Japan's major manufacturers remain cautious about the economy's trajectory, with business sentiment flat for the quarter as concerns about the pandemic linger, a key survey showed today.

Among major non-manufacturers however, there was an improvement in confidence about the world's third largest economy, offering glimmers of hope.

The Bank of Japan's Tankan business survey - a quarterly poll of about 10,000 companies - showed a reading of +18 for major manufacturers, unchanged from the previous quarter and slightly lower than market consensus of +19.

Among large non-manufacturers meanwhile, confidence improved to +9 from +2 in the previous quarter, the sixth consecutive improvement.

The short-term business sentiment survey reports the difference between the percentage of firms that are upbeat and those that see conditions as unfavourable.

A positive figure means more companies see business conditions as favourable than those that consider them unfavourable. It is considered to be the broadest indicator of how Japan Inc is faring.

The latest reading comes with concerns over the Omicron variant of the coronavirus.

For medium-sized manufacturing firms, confidence was unchanged at +6, while sentiment for small companies improved to -1 from -3.

Japan has seen a smaller virus outbreak than many countries, with fewer than 18,400 deaths despite avoiding harsh lockdowns.

Emergency virus measures that largely affected bars and restaurants as well as limiting large events were in place in parts of the country for much of the year, but were lifted finally in October.

To address concerns over the Omicron variant, Japan earlier this month abruptly asked airlines to stop taking all new incoming flight reservations for a month, but later softened the blanket ban to make it easier for citizens to return.

Its vaccination programme, which began later than in many developed countries and started slowly, has picked up speed however, with around 78% of the population now fully inoculated.

Japan's government this month started administering the third dose of vaccine, initially targeting health workers.

The government has also pledged large stimulus measures in a bid to support economic recovery and those hit by the pandemic downturn.