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The government on Friday left its assessment of the economy unchanged for July, with sharp rises in stock prices offset by murky outlooks in the direction of overseas economies.

“While the economy remains roughly flat, weak movements have been seen recently in some areas,” the Cabinet Office said in its monthly economic report for July, using the same phrasing as in its June report.

The July report says stock prices “are showing a significant recovery,” mirroring the bullish market that pushed the bellwether Nikkei stock average up to around 10,000, a level not seen since last August.

But it says there are still “uncertainties surrounding the future of the overseas economy.” The world’s economic recovery has weakened although part of Asia is seeing continuing economic expansion, it says.

Jun Saito, director for economic assessment and policy analysis in the Cabinet Office, said the government did not revise upward its economic assessment because recent gains in share prices were not enough for the government to change its view of the economy.

“We have yet to confirm how recent rises in share prices have affected the real economy, especially in such fields as asset prices and companies’ balance sheets,” Saito said.

“Overall, the economy remains at a standstill. And we see some downside risks in the course of the overseas economy,” he said.

According to the report, exports have become flat, capital spending continues to show a moderate incipient recovery and industrial production is declining somewhat, all unchanged from the June report.

Corporate profits continue to show a moderate improvement, unchanged from the previous month, while private consumption remains generally flat, also unchanged.

Looking ahead, the report says the economy “is expected to move toward an incipient recovery” if the recovery in the United States and other economies is sustained.

It also says attention should be paid to the development of stock prices and long-term interest rates.

On overseas economies, the report says a weak economic recovery continues in the U.S., while the euro-zone economy is seeing weak conditions.

In Asia, economic growth continues in China and Thailand, while South Korea and Taiwan are seeing slowdowns, apparently due to the aftereffects of the severe acute respiratory syndrome outbreak.

The report also says domestic wholesale prices are declining somewhat and consumer prices are flat, both unchanged from the previous month, underlining persistent deflation.

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