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The government maintained an upbeat assessment of Japan’s economy in a monthly report released Thursday, though it pointed out that slowing growth in industrial production and exports, along with high crude oil prices, are clouding the economic outlook.

“The economy is recovering at a solid pace,” the Cabinet Office said in its September economic report.

The description of the state of the economy this time, however, appears more tentative than the wording used in August. The report last month said, “The economy is recovering at a solid pace as improvements in the corporate sector are extending into the household sector.”

While the September report leaves the overall economic assessment unchanged, the Cabinet Office downgraded the assessment on exports and industrial production, apparently due to a slowdown in investment and production in China following the country’s recent credit-tightening measures.

The September report notes that Japan’s exports are rising “slowly” and industrial production is increasing “moderately.” By contrast, the August report noted that exports and industrial production had been rising.

A senior Cabinet Office official said a slowdown in exports to China, particularly steel, and an easing of domestic demand for personal computers and digital cameras may cloud the outlook for the Japanese economy.

The official added that production of electronic devices has slowed recently, with some manufacturers building up inventories. This indicates that sales of digital home electronic products may stall.

The September report asserts that Japan’s economic recovery is expected to continue in the coming months as domestic demand increases steadily.

It says the government will keep a close watch on crude oil prices, the economies of Japan’s major trade partners as well as other factors, and assess their impact on the Japanese economy.

The government will closely monitor developments in the U.S. economy, the Chinese economy and global oil markets, the Cabinet Office official said.

Crude oil futures have moved around $43 a barrel in recent days, having hit a record $49.40 a barrel in New York on Aug. 20. Policymakers and economists hope oil prices will stabilize at around $30 to $35 per barrel.

According to the September economic report, corporate profits are improving sharply, capital spending is increasing, and the employment situation is improving, though with some severe pockets.

On prices, the report states that consumer prices in Japan remain flat but wholesale prices are rising due to increases in the prices of steel, oil and other materials.

The Cabinet Office upgraded its economic assessment in July for the first time in six months. It also described the nation’s economic recovery as “solid” for the first time since August 1997.

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