Japan's economic prospects appear to have darkened again, with the Bank of Japan's (BOJ) closely watched survey of business confidence showing most big companies in the manufacturing sector still are gloomy about the future. But a central bank official said the survey result should be viewed as an 'aberration' rather than a sign that recovery had stalled. He said short-term market reactions to the survey, which included a steep fall in long-term interest rates, were 'probably exaggerated'. The key indicator in the quarterly survey is a diffusion index which measures the difference between the percentage of companies forecasting an improvement in business conditions over the next three months and those who expect conditions to worsen. Many economists expected the index for big companies in the manufacturing sector to turn positive this month for the first time since the economy plunged into recession in 1991. The figure stands at minus-seven - a four-point decline from the previous survey published in June. This is the second time the manufacturing index has turned downwards since the government began claiming in early 1994 that the economy was pulling out of recession. Analysts were quick to claim that special factors might have influenced the result. An industry breakdown included in the survey showed processing industries, such as cars and electronics, generally were doing better than three months ago but that basic materials industries were in trouble because of a massive inventory overhang and weakening markets. 'Steel and chemicals are vitally important sectors, but their problems don't mean that the whole economy is grinding to a halt', an economist at Long Term Credit Bank of Japan, Hidefuto Wakita, said. He said the BOJ survey, and one conducted recently by his bank, showed industrial investment increasing about 6.5 per cent this fiscal year. This is important because private capital investment will be a vital factor in sustaining growth after a series of emergency public works programmes launched by the government last year come to an end in the second half of this year. Although there were bright spots in the picture presented by the BOJ survey, economists said the results probably would discourage the central bank from tightening interest rates. The bank cut its official discount rate to a record low of 0.5 per cent in September because of unexpected weakness in the economy. Some analysts expect the 0.5 per cent rate to remain in force until the end of next year.