Finance Ministry upgrades economic outlook slightly

The Finance Ministry slightly upgraded its assessment of Japan’s economy on Tuesday, marking a third consecutive quarter of improvement.

The ministry attributed the upgrade to a perceived pickup in production and personal consumption.

But the ministry retained severe assessments in other categories in a quarterly report summing up the economic assessments of its 11 regional financial bureaus, indicating that the upturn lacks both strength and breadth.

“The economic situation in the ministry’s regional bureaus remains severe,” the ministry said.

It added, however, that “worsening of the economies has come to an end in almost all areas, and there are signs of improvement in some parts of many economies.”

The local finance bureau chiefs meet once every quarter to discuss the state of the nation’s economy.

In the previous report, released in June, the ministry said the deteriorating economic conditions were “generally coming to a halt,” and that signs of improvement were observed “in some areas.”

As the latest report is based on economic indicators and assessments compiled by the bureaus up until September, it fails to reflect the recent stock market decline.

“Production is improving in almost all regions,” remarked the ministry, upgrading its assessment from June, when it said production was picking up in “many regions.”

The latest report also cites an improvement in personal consumption, though it states that consumption was still mixed, with signs of strength in some areas and weakness in others.

It says that although business sentiment remains severe, the degree of deterioration has dropped from the level of the June report in many areas.

But the ministry downgraded its assessment of housing construction, stating that it fell below the level of the previous year in many areas. In June, it said housing construction was “slightly below” the level of the previous year.

The ministry maintained that the employment situation “continues to be severe in all regions.”

The report maintains that corporate capital investment is expected to fall below the level of the previous year in many areas and that the number of bankruptcies remains high.

Finance Minister Masajuro Shiokawa told the heads of the regional bureaus Tuesday that he wants bureau officials to go out more often and talk to various people in an effort to learn more about the economic conditions in their respective areas.

“I hope you will talk to factory operators and shop owners, and attend meetings by business groups to get an idea” of what the economy is like, and report the results to the ministry, he said.