The Japanese government on Tuesday upgraded its key economic assessment for the first time in three months, reflecting a recovery in personal consumption as economic activities continue to return to normal from coronavirus restrictions.
"The Japanese economy is picking up moderately," the Cabinet Office said in its monthly report for July, an upgrade from saying it shows signs of picking up in the previous report, citing improvements in private consumption, imports and employment.
As for short-term prospects, the monthly report warned of downside risks derived from "fluctuations in the financial and capital markets amid global monetary tightening," referring to moves by major central banks including the U.S. Federal Reserve.
The government also cited such risks as rising raw material prices and supply-side constraints, although it dropped wording saying they have been affected by the war in Ukraine as some commodity prices have fallen after surges following Russia's invasion.
As for July, the government revised upward its assessment of private consumption for the first time in three months, saying it is "picking up moderately" on the back of recovering services-related spending such as eating out and traveling, as well as transportation.
Sales by major department stores have improved on the back of brisk demand for summer clothing amid rising temperatures as more people go out, the government said.
On the employment situation, the government said it is "picking up," compared with showing signs of picking up last month, with the nation's employment rate rising to pre-pandemic levels due mainly to an increase in regular employment among women.
The government revised upward its view on imports for the second straight month, describing it as showing signs of picking up, reflecting solid imports from Asia.
It left its view on consumer prices as "rising" unchanged after data showed that Japan's core consumer prices excluding perishable foods surged 2.2 percent in June, the fastest pace in over seven years.
It retained its assessment of the world economy, saying it appears to be "pausing" in some parts but picking up as a whole, while revising upward its view on China for the first time since March.
