Recent signs of economic recovery have begun to fade in some areas of Japan as uncertainty mounts over the export-driven pickup, the Ministry of Economy, Trade and Industry said Thursday in a quarterly report.

METI surveyed some 1,300 nonfinancial companies from late August to early September, and as a result upgraded its overall view on regional economies from the previous report in May, but it also warned of growing uncertainty.

“The local economies remain in a severe situation, but some signs of recovery are seen,” METI said in the report, which was presented to a meeting of its top officials and regional bureau chiefs.

“In some areas, moves of production show a temporary pause. As for future prospects, the sense of uncertainty is mounting.”

In its May report, the ministry pointed to “signs of bottoming out” in many areas, although the overall situation was severe, upgrading its assessment on regional economies nationwide for the first time. It began the survey last year.

A pause in the moderate recovery of production is seen in the Kanto region, led by the information technology sector, including semiconductors and electronics, according to METI.

Regarding the future, many companies now forecast a later recovery than they had expected and are downgrading their demand estimates, it said.

Manufacturers of some IT items are particularly cautious in their production plans, out of worries the markets will fall again into a correction phase.

Although fewer companies say they have an excessive payroll, they continue to adjust employment by the use of part-timers and temporary workers, causing consumption to remain stagnant.

Uncertainty about demand is making companies cautious about investment, although their belief that they have excessive capacity has begun to alleviate.

In terms of financing, many companies have finished preparing for the April introduction of a 10 million yen refund cap on all bank deposits, except for settlement-specific accounts, and most are no longer calling for more protection.

As for the 50 industries picked out in 15 new and promising areas, covering 920 firms, METI said several industries continue to enjoy growth despite severe circumstances, but some have turned sluggish, and worries about the U.S. economy are spreading among companies.

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