The government Thursday retained its assessment that the economy is recovering moderately but downgraded its view on private consumption for the first time in 11 months.
The monthly economic assessment for February said that sluggish consumer spending remains one of the major bottlenecks for growth as the Cabinet Office upgraded its view on business investment, exports and imports.
“The Japanese economy is on a moderate recovery, while delayed improvement in part can be seen,” the report said, using the same wording for three months in a row.
The Cabinet Office said the trend of a pick-up in private consumption is still in place but it appears to have been “pausing recently.”
Rising prices of perishables put a damper on consumption in late 2016 and consumers appear more willing to save money than increase spending, a government official said. Its January report described private consumption as showing “movements of picking up.”
The view on housing construction was also downgraded.
The government of Prime Minister Shinzo Abe has been encouraging both consumers and companies to increase their spending as part of efforts to pull the economy out of deflation.
Corporate investment, another key indicator to gauge economic strength, was upgraded for the first time in 11 months, as there were “movements of picking up,” a change from the previous assessment which said improvement was pausing.
Government data showed earlier in the month that Japan’s economy grew for a fourth straight quarter in the three months through December as robust exports to Asia and the United States partly made up for weak demand at home.
The government changed its assessment of imports, saying they are now showing movements of picking up, after saying in January they were “more or less flat.”
On future prospects, the economy is expected to recover but attention should be given to uncertainty in overseas economies and the effects of fluctuations in financial and capital markets, the report said.
The government left its assessment of overseas economies intact, saying they are “recovering moderately as a whole, though weakness can be seen in some areas.”
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