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It was the first time in six months that the
government has upgraded its overall assessment.
The government said personal spending was showing signs of
recovery, an upgrade from last month, as an increase in the
nationwide sales tax to 8 percent from 5 percent on April 1 was
having only a temporary impact on consumption.
"There are still some weak points, but there are signs that
consumption is recovering," the Cabinet Office said in its
monthly economic report. "We expect the recovery to continue as
the jobs market and wages improve."
Personal consumption accounts for about 60 percent of the
economy.
Sales of electronics and home appliances are recovering, while
sales of cars are showing signs of bottoming out, a Cabinet
Office official said.
Bank of Japan Governor Haruhiko Kuroda expressed a similar view
to the government on Tuesday, when he said he expected strong
demand for labor and upward pressure on wages to bolster
consumer spending.
However, the Cabinet Office lowered its assessment of capital
expenditure for the first time in more than a year and a half
due to a drop in capital goods shipments and machinery orders.
Capital expenditure had been rising but is starting to weaken,
the report said.
The government maintained its view on exports, saying they were
flat. It also still viewed industrial output as weak after the
sales tax rise.
Policymakers and private-sector analysts expect the economy to
have contracted in the April-June quarter due to the sales tax
increase, but growth is expected to resume in the current
quarter as domestic demand remains strong.
(Reporting by Stanley White; Editing by Alan Raybould)
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