The government on Friday upgraded its assessment of the economy in September for the second month in a row, citing increased capital spending and a pickup in exports.

"The economy is showing movements toward incipient recovery," the Cabinet Office said in its monthly economy report, employing a more upbeat tone than in its August report, when it said the economy "remains roughly flat."

The report was the latest in a series of signs pointing to an economic upturn. Earlier in the week, data showed the economy in the April-June quarter grew by the largest margin in more than two years.