TOKYO (Reuters) – Japan’s government raised its assessment of consumer spending for the first time in 10 months in May but kept its overall view of the economy unchanged.
It also cut its view on exports and factory output in its monthly report, worrying signs as the economic recovery struggles to gain momentum after last year’s recession.
The government’s new economic report came after the Bank of Japan last week offered a slightly more upbeat view of the economy and its governor Haruhiko Kuroda shrugged off the need for more monetary stimulus.
“The economy continues a moderate recovery trend,” the Cabinet Office said in the report, slightly tweaking wording from last month when it said the economy continued a moderate recovery trend as improvement was seen in the corporate sector.
Among key economic elements, the Cabinet Office said consumer spending was “showing signs of picking up” in the latest report, a firmer assessment from its previous view when it said that it was “holding firm as a whole”.
“Certain gains on share prices, wage increase and decline in oil prices affected consumer sentiment,” which helped consumer spending, an official at the Cabinet Office said.
It also said housing construction was showing movements of picking up, raising its view for the first time in four months.
Consumer spending and housing construction were areas hit by a sales tax increase last year.
Meanwhile, the Cabinet Office downgraded its view on exports for the first time since November 2013 saying they were “almost flat” as demand from Asian nations shows signs of cooling.
It said industrial production was picking up but weakness was seen in some areas, downgrading its view for the first time in seven months.
The Cabinet Office said capital spending was almost flat and consumer prices were rising moderately in May, keeping the same assessment from last month.
BOJ Governor Kuroda said this week overall consumer price index year-on-year changes were likely to be around zero for the time being but would accelerate again once the impact from a decline in oil prices starts to fade.
The economy expanded at its fastest pace in a year in the first quarter but goods piling up in factory warehouses posed challenges to policymakers hoping to beat years of deflation.
(Reporting by Kaori Kaneko; Editing by Jacqueline Wong)