The overall state of the economy has weakened in recent months due to shrinking business confidence and stagnant consumer spending, the Finance Ministry said Monday in a report.

The downgraded economic assessment, compiled at a periodic meeting of the ministry’s 11 regional bureaus, reflects the effect of the decelerating U.S. economy and a subsequent decline in global demand.

In the ministry’s previous assessment in April, the bureau chiefs cited “moves toward a self-sustainable recovery led by the corporate sector.” But this phrase was absent in the latest assessment.

Most of the regions reported that their economies are slower or weaker compared with two months ago.

As for corporate equipment investment, the capital investment plans of manufacturers for the current fiscal year were lower than in the previous term in the Kanto, Tohoku, Shikoku and Kyushu regions.

In the Kanto region, major companies in all industries are expected to reduce capital investment this fiscal year by 2.2 percent from the previous term, the report says.

Overall consumer spending remained unchanged but steady in each region. Sales of home electric appliances dropped due to a new recycling law that took effect April 1.

Regarding labor, demand for workers declined in many regions, the report says.

State debt hits record

The government’s outstanding debt stood at a record-high 538.39 trillion yen at the end of March, up from 492.97 trillion yen a year earlier, due to increased bond issuances to fund economic stimulus measures, the Finance Ministry said Monday.

The previous record high of 522.10 trillion yen was registered at the end of last December.

The outstanding balance of government bonds rose to 380.66 trillion yen, up from 343.13 trillion yen a year earlier, and government borrowing rose to 110.09 trillion yen from 105.64 trillion yen, the ministry said.

The outstanding balance of financing bills, which are partly used for foreign-exchange market interventions, rose to 47.64 trillion yen from 44.19 trillion yen, the ministry said.

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