The report comes as Japan on Friday ended a state of emergency in many areas, including Tokyo, after new coronavirus infections began falling.
The world’s third-largest economy was in the doldrums even before the pandemic hit in several waves that have crimped business activity.
The survey found that shortages of components such as computer chips are constraining the recovery.
Manufacturers are running down their inventories, and in some cases suspending production at some factories in response.
“Such low inventory levels were last seen during the 1980s bubble. Among wholesalers, inventory levels fell to an all-time low,” Marcel Thieliant of Capital Economics said in a report.
He noted that production capacity dipped slightly in the latest survey, with room for improvement.
One positive result of the shortfalls is that some manufacturers are investing in factory equipment: large manufacturers forecasted a 10% increase in capital spending, which was the strongest outlook since the same quarter in 2018.