The economy continues to show improvement amid solid domestic demand, though heightened trade tensions and other risks warrant attention, the government said Thursday.

The Cabinet Office maintained its headline assessment that the economy "is recovering at a moderate pace" in the November edition of its monthly economic report and held to its views on key elements including private consumption, capital spending and exports.

Private consumption, which accounts for more than half of the domestic economy, is "picking up" while spending by companies is "increasing," the report said.

Exports are "almost flat" as a slump in demand for smartphones in Asia weighed on orders for electronic components and manufacturing equipment.

The office, meanwhile, warned of the negative impact of trade issues on the global economy, as the United States and China wage a tariff war affecting each other's imported goods worth hundreds of billions of dollars.

"Attention should be given to risks including the effects of situations concerning trade issues on the world economy, the uncertainty in overseas economies and the effects of fluctuations in financial and capital markets," it said.

A Cabinet Office official added that the effects of a string of natural disasters that caused Japan's economy to shrink in the July-September quarter were gradually wearing off.

A powerful typhoon that temporarily shut down Osaka's main airport and an earthquake that caused an island-wide blackout in Hokkaido contributed to gross domestic product contracting by an annualized real 1.2 percent, according to preliminary data.