The large manufacturers' index rose to plus 19 in September from plus 18 in the June survey. Analysts had on average expected a figure of plus 20.

A positive reading means that confident firms outweigh pessimistic ones.

The index for major non-manufacturing companies remained unchanged from the June survey at plus 15, missing projections of an improvement to plus 17.

The survey provided some support for the government's view than the Japanese economy is pulling out of a soft patch, albeit at a slower pace than markets had hoped.

Investors reacted cautiously to the survey, with the benchmark Nikkei-225 index falling 8.93 points or 0.07 percent to 13,565.37 in the first few minutes of trading.

The survey polls more than 10,000 companies of all sizes across most industries and provides the most detailed picture of how Japanese industry sees business conditions over the next three to six months.

Companies are asked about the outlook for sales, profits, capital spending, employment and other factors.

A pick-up in domestic demand and a weaker yen are boosting the fortunes of Japan's large manufacturers, with Tokyo shares at the highest level for over four years amid an upbeat outlook for the world's number two economy.