The government left its upbeat assessment of Japan’s economy unchanged in a monthly report released Thursday.
However, it cautioned that record-high crude oil prices may hurt positive developments in the economy.
“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 August economic report, using the same phrase as in the July report.
The report says the economic recovery will continue in the coming months amid the recovery of the world economy and rising domestic demand.
Private-sector economists have forecast that gross domestic product for the April-June quarter expanded an average 1 percent in real terms from the previous quarter, or an annualized 4.2 percent.
But the August economic report warns that the government should pay close attention to “the effects on the economies of developments in crude oil prices, global interest rates and other factors.”
On Wednesday, U.S. crude oil prices briefly climbed to $44.34 a barrel, the highest quote since oil futures began trading on the New York Mercantile Exchange in 1983.
Oil prices have risen by more than a third since the end of 2003 due to jitters over geopolitical risks in the Middle East, surging oil demand from China and uncertainties over management of Russia’s Yukos Oil Co., which supplies some 1.7 million barrels of oil a day, traders say.
According to the August report, Japan’s exports and industrial production are rising, while personal spending is moderately increasing.
Japan’s exports and imports with the rest of the world were the second-highest on record in June, spurred by brisk trading with China and other Asian economies.
Corporate profits are improving sharply and capital spending is increasing, the August economic report says, adding that the employment situation keeps improving.
Consumer prices in Japan remain flat, but wholesale prices are rising due to increases in prices of steel, oil and other materials, it says.
Japan’s wholesale prices jumped 1.4 percent in June from a year earlier for the biggest rise in six years and nine months, a Cabinet Office official said, citing Bank of Japan data. The figure has sparked speculation that the nation will soon be able to overcome deflation.
A key gauge of the current state of the economy stayed above the boom-or-bust line of 50 percent in June for the second straight month, spurred by strong wholesale figures and improving employment, the government said Thursday.
The index of coincident economic indicators stood at 88.9 percent, up from a revised 70.0 percent in May, the Cabinet Office said in a preliminary report.
Of the 11 indicators used to calculate the coincident index, nine indicators were available, which all showed positive readings, except for department store sales.