Over 80 percent of major companies in Japan expect the country's economy to expand in the next one year, supported by a recovery in personal consumption following the removal of COVID-19 restrictions, a Kyodo News survey showed.

In the survey of 114 companies, including Toyota Motor Corp. and the Uniqlo clothing chain operator Fast Retailing Co., 82 percent said they project economic expansion, up from 55 percent the previous summer, when firms were concerned over price surges.

The results showed optimism over the economy even as firms grapple with rising material and energy costs, with 94 percent of those forecasting an expansion citing recovery of consumer spending as one of the main drivers.

With multiple answered allowed, 67 percent cited recovery in capital expenditure, while 55 percent chose departing from the coronavirus pandemic. A significant number also pointed to hopes for increased spending by foreign tourists visiting Japan.

The percentage of respondents that expect economic conditions to remain unchanged or contract moderately dropped to 15 percent from 42 percent a year ago. Among such firms, the largest number cited expectations of a slowdown of the U.S. economy as a reason behind their response.

While 59 percent said their business performance is on an expansionary trend, around the same number said rising material and energy costs are pressuring their profits.

About half of the companies surveyed said they plan to raise the prices of their goods and services through next fiscal year starting April.

Nearly half said they are short-staffed, but only 24 percent said they are considering pay hikes, the survey found.

As for desirable foreign exchange rates, many said they want the yen to trade between 120 and 140 against the U.S. dollar.

Asked about the accomplishments of Prime Minister Fumio Kishida's government, 25 percent cited its effort to secure domestic production bases for advanced semiconductors.

On the government's goal of increasing the proportion of female executives in major companies to over 30 percent by 2030, only 5 percent said they have achieved or will attain that target by the end of the year.

The survey covered representative companies in each industry from early July to early August.