The government on Tuesday upgraded its assessment of Japan's economy for the first time in six months, using the strongest words to describe an improvement in personal spending since the burst of the asset-inflated bubble economy in the early 1990s.

"The economy is recovering at a solid pace as improvements in the corporate sector are extending into the household sector," the Cabinet Office said in its monthly economic report for July.

It was the first time the office has used the word solid to describe economic recovery since August 1997.