TOKYO (AFX) - The Cabinet Office upgraded its assessment of the Japanese economy in its economic report for June, the first upgrade in six months.
The government described the economy as still struggling to regain the strong growth momentum it experienced from the second half of 2003 through the first quarter of 2004, but suggested the benefits of robust corporate profits were gradually spreading throughout the household sector.
"The economy is recovering at a moderate pace, while signs are seen of it coming out of a weak situation," the report said, upgrading its assessment in May that "some weak movements continue to be seen."
On Monday, the government revised its estimate of GDP growth in January-March to a real, annualized rate of 4.9 pct, down from an initially estimated 5.3 pct.
Still, even the revised data showed the world's second-largest economy last quarter grew at about twice the rate initially expected, and at its fastest pace in a year, due to expanding domestic demand and corporate capital spending.
Domestic demand expanded by 1.3 pct from the previous quarter, slightly less than the previously estimated 1.4 pct increase.
"We think the economy remains in an adjustment phase but perhaps it is in the final phase toward an exit," a Cabinet Office official said.
The Cabinet Office also raised its assessment of private consumption and employment conditions, while keeping unchanged its view of the trends of corporate profits, capex spending and industrial production.
The government altered its description of private consumption to "picking up" from "showing signs of picking up." It also said labor market conditions are "improving on a broader basis," compared to merely "improving" in May.
"Household spending has showed signs of improvement, which we believe provided a lift to personal consumption overall," the official added.
The Cabinet Office continued to describe corporate profits as "improving," investment as "increasing moderately," and industrial production as "levelling off."
The government left unchanged most of the wording used in the previous month to describe the short-term outlook for the economy but added "the household sector is also improving."
The May report said: "The recovery is expected to remain solid, due to the steady recovery of the world economy and as the (Japanese) corporate sector continues to be resilient."
But the description of the nation's trade and service account surplus was altered to "decreasing" in the June report, from "flat" in May.
The government listed the same set of risk factors to the recovery: inventory adjustment in IT-related industries, and high crude oil prices.
"Inventory adjustment in the IT-related sector appears likely to end soon, but inventory in other areas such as transportation machinery, chemicals and general machinery is increasing," the report said.
Industrial output in April rose a revised, seasonally-adjusted 1.9 pct from the previous month, less than the initially estimated increase of 2.2 pct, the Ministry of Economy, Trade and Industry (METI) said.
Year-on-year, industrial output rose a revised 0.3 pct, compared to an initially reported increase of 0.6 pct.
Shipments in April rose 2.7 pct from the previous month, in line with the initially estimated figure.
Inventories were flat from the previous month, in line with the previous estimate.
nozomi.toyama@xfn.com
nt/rte/mb
For more information and to contact AFX: www.afxnews.com and www.afxpress.com
The government described the economy as still struggling to regain the strong growth momentum it experienced from the second half of 2003 through the first quarter of 2004, but suggested the benefits of robust corporate profits were gradually spreading throughout the household sector.
"The economy is recovering at a moderate pace, while signs are seen of it coming out of a weak situation," the report said, upgrading its assessment in May that "some weak movements continue to be seen."
On Monday, the government revised its estimate of GDP growth in January-March to a real, annualized rate of 4.9 pct, down from an initially estimated 5.3 pct.
Still, even the revised data showed the world's second-largest economy last quarter grew at about twice the rate initially expected, and at its fastest pace in a year, due to expanding domestic demand and corporate capital spending.
Domestic demand expanded by 1.3 pct from the previous quarter, slightly less than the previously estimated 1.4 pct increase.
"We think the economy remains in an adjustment phase but perhaps it is in the final phase toward an exit," a Cabinet Office official said.
The Cabinet Office also raised its assessment of private consumption and employment conditions, while keeping unchanged its view of the trends of corporate profits, capex spending and industrial production.
The government altered its description of private consumption to "picking up" from "showing signs of picking up." It also said labor market conditions are "improving on a broader basis," compared to merely "improving" in May.
"Household spending has showed signs of improvement, which we believe provided a lift to personal consumption overall," the official added.
The Cabinet Office continued to describe corporate profits as "improving," investment as "increasing moderately," and industrial production as "levelling off."
The government left unchanged most of the wording used in the previous month to describe the short-term outlook for the economy but added "the household sector is also improving."
The May report said: "The recovery is expected to remain solid, due to the steady recovery of the world economy and as the (Japanese) corporate sector continues to be resilient."
But the description of the nation's trade and service account surplus was altered to "decreasing" in the June report, from "flat" in May.
The government listed the same set of risk factors to the recovery: inventory adjustment in IT-related industries, and high crude oil prices.
"Inventory adjustment in the IT-related sector appears likely to end soon, but inventory in other areas such as transportation machinery, chemicals and general machinery is increasing," the report said.
Industrial output in April rose a revised, seasonally-adjusted 1.9 pct from the previous month, less than the initially estimated increase of 2.2 pct, the Ministry of Economy, Trade and Industry (METI) said.
Year-on-year, industrial output rose a revised 0.3 pct, compared to an initially reported increase of 0.6 pct.
Shipments in April rose 2.7 pct from the previous month, in line with the initially estimated figure.
Inventories were flat from the previous month, in line with the previous estimate.
nozomi.toyama@xfn.com
nt/rte/mb
For more information and to contact AFX: www.afxnews.com and www.afxpress.com
© 2005 AFX News
