The Cabinet Office on Wednesday said its overall assessment of the economy for October has not changed but at the same time acknowledged the export-driven recovery has slowed and downside risks accelerated.
“Movements of a moderate incipient recovery continue to be observable in some areas of the economy, though the environment has become more severe,” the Cabinet Office said in its monthly report on the economy for October.
Economic and fiscal policy minister Heizo Takenaka told a news conference, “The pace of export increases is decelerating . . . and the role of exports in leading economic improvement has been weakening.”
From the Cabinet Office’s point of view, the state of the economy has not changed for three consecutive months. In its previous report for September, the office said movements of a nascent recovery “can be seen in some areas of the economy, though the environment has become more severe.”
In the latest report, the office said those moves will likely remain intact over the short term.
Nevertheless, the office expressed concern about the domestic stock slump and economic developments overseas.
“The environment, such as concerns over the future of the U.S. and other economies and the decline in domestic stock prices, has become more severe, and concerns over downward pressure on final demand that may be exerted by the development is deepening.”
A senior Cabinet Office official said its overall judgment remains unchanged but that the office has inserted the word “moderate” to describe the momentum of a recovery that has been losing steam due to weakening external demand.
The official said the government is increasingly cautious about the outlook for the Japanese economy, due to growing uncertainties about the global economy, especially in regard to the U.S.
The government has downgraded its assessment of the U.S. economy for two months in a row, saying, “The recovery in the U.S. economy has become even more moderate.”
The office lowered its assessments for exports, housing construction, and corporate business sentiment but upgraded those for corporate earnings and employment.
“The pace of export growth has slowed,” the office said in the report. In September, it said exports were increasing mainly to other Asian countries.
The office also said corporate business sentiment has been improving but that its pace also has slowed.
The assessment for industrial production, however, was left unchanged. “A moderate incipient recovery in industrial production is continuing,” the Cabinet Office said. Private consumption was described as flat but firm — in some areas.
And corporate capital investment, another key factor, “is showing signs of bottoming out in the future.”
Tokyo in doldrums
Consumer confidence in Tokyo declined in September for the second consecutive month, with all five component indexes down from August, according to a government survey released Wednesday.
The Cabinet Office said the Tokyo consumer sentiment index deteriorated to 42.6 in September, down 1.5 points from August.
The index is designed to gauge consumer expectations for the coming six months in five categories: overall livelihood, income growth, price trends, employment and buying appetite for durable goods.
It is calculated by assigning points on the basis of whether consumers believe conditions in the next six months will improve, improve somewhat, remain unchanged, deteriorate somewhat or deteriorate.
The September index for living conditions was down 1.8 points to 42.8, income growth was down 1.5 points to 40.6 and price trends was down 1 point to 49.8.
The employment index was down 1.9 points to 33.9, while buying appetite for durable goods was down 0.9 point to 46.1.
The survey was conducted Sept. 15 on 435 randomly selected households, all of which responded.