Japan govt keeps overall economic assessment unchanged in April

Japan govt keeps overall economic assessment unchanged in April

	Published : Mon, 16 Apr 2007 10:43 By : Agencies Print this Story

TOKYO (XFN-ASIA) - The government has left its overall assessment of the economy unchanged for this month but slightly upgraded its analysis on the trend of consumer spending while downgrading its view on industrial production.

In its latest monthly report approved at a cabinet meeting, the Cabinet Office said the economy ' is recovering despite weakness in industrial production in some sectors.'

The government left unchanged its analysis on the trend of the overall economy while deleting the reference to the weakness in consumer spending and raising caution about the possibility that industrial production could slip into a soft patch.

In March, the government said the economy 'is recovering, despite some weakness in consumption.'

The government also remained positive about the outlook for the Japanese economy, saying that over the short term, 'economic recovery is expected to continue, supported by domestic private demand as high corporate profits feed into the household sector.'

Among key economic parameters, the government said in its latest monthly report that private consumption 'is showing a pick-up,' upgrading the view from a month earlier that private consumption was 'almost flat.'

This was the first upward revision on its view on private consumption in 20 months.

But a government official from the Cabinet Office said that despite the upward revision here, it was premature to say that consumption is fully recovering, pointing out that the latest rise was largely attributable to warmer than usual weather conditions.

'Amid almost flat growth in employee incomes, the data has not shown that private consumption is on an upward trend,' the official said.

Meanwhile, the government downgraded its view on industrial production for the first time in 28 months, saying that production 'flattened recently.'

A month earlier, the government said industrial production was 'increasing moderately.'

The downgrade in the view on industrial production was prompted by recent data showing that output of factories and mines in February fell by a seasonally-adjusted 0.2 pct following a 1.7 pct decline in January.

The official, meantime, played down the significance of the spillover effect of ongoing inventory adjustments in the IT sector, saying the impact of such adjustments is expected to be moderate.

The government also downgraded its assessment on housing starts to 'almost flat' from 'has been increasing recently' for the first time in seven months, while also downgrading its view on business confidence to 'almost flat' from 'moderately improving,' the first such warning in 12 months.

In addition, the government likewise downgraded its view on the total cash earnings of employees, but stressed that this has not developed to such an extent as to require changing the total assessment on the employment situation, the official said.

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kaori.kaneko@xfn.com