The overall state of the economy has reached a new level of severity due to decelerating business activities and increasing unemployment, the Finance Ministry said Tuesday in a report.
The downgraded economic assessment, compiled by the ministry's 11 regional financial bureaus, reflects the effect of the decelerating U.S. economy and a subsequent decline in global demand.
In the ministry's previous assessment in June, the ministry cited "further weakening of the economy," but the phrase was replaced by "intensifying severity" in its latest assessment.
The capital investment plans of manufacturers for the current fiscal year were lower than the previous term in the Hokkaido, Tohoku, Hokuriku, Shikoku and Kyushu regions.
Nonetheless, a 15.4 percent rise in capital spending plans was reported by manufacturers in the Kanto region.
As a result, companies in all industries in the region are expected to increase capital investment this fiscal year by 1.9 percent from the previous term, the report says.
Overall consumer spending remained unchanged at stagnant levels in each region. Sales of home electric appliances dropped due to shrinking demand for personal computers, the report says.
Demand for workers declined in almost all regions, the report says. Japan's unemployment rate has stood at 5 percent.