A key gauge of the current state of economy stayed above the boom-or-bust line of 50 percent in August for the fourth straight month but fell close to the threshold partly due to the cool summer.
The index of coincident economic indicators came to 55.6 percent, down from a revised 80 percent in July and a revised 63.6 percent in June, the Cabinet Office's Economic and Social Research Institute said Tuesday in a preliminary report.
A reading above 50 percent is considered a sign of expansion, while a figure below that is seen as a sign of contraction.
The cool summer partly contributed to the drop, with the commercial sales and large-lot electricity consumption sectors particularly affected, a government official said.
"The impact of the cool summer is one of the reasons the index stayed near 50 percent," he said.
Though some data such as the index of industrial shipments and the ratio of job offers to seekers improved in August, the government remained cautious, leaving its economic assessment unchanged at "roughly flat."
Looking ahead, the official said the coincident index will continue to stay around 50 percent given a mixed outlook, with improvement anticipated for employment but uncertainties hanging over industrial production.
The index of leading indicators, measuring economic moves about six months down the road, stayed above 50 percent for the fourth consecutive month at 55.6 percent, down from a revised 80 percent in July and 75 percent in June.
The index of lagging indicators, intended to gauge economic performance in the recent past, stood at 50.0 percent, following a revised 83.3 percent in July and a revised 64.3 percent in June, it said.
The diffusion indexes compare the levels of various data for a reporting month with levels three months earlier.