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By Max Sato
TOKYO (MNI) - Japan's government on Tuesday left its overall economic
assessment unchanged in June, saying for the sixth straight month that the
domestic economy is "recovering moderately" while noting soft spots in consumer
confidence and Eurozone growth.
The government maintained its views on key components of the economy:
private consumption and exports are "picking up" while business investment and
factory output are "increasing moderately."
However, it also added that "the pickup in consumer confidence is marking
While the government maintained its assessment that the Eurozone economy is
recovering moderately, it downgraded its view on production and exports in the
region, saying their pickup "is taking a breather."
Asked whether the government considered downgrading its overall view on the
strength of Eurozone growth, Atsushi Ogawa, director of research on overseas
economies at the Cabinet Office told reporters, "In Germany, there is a
constraint in supply, not in demand. We want to see how things evolve."
He noted that the Eurozone GDP slowdown in the January-March quarter was
due partly to temporary factors, such as the cold weather, worker strikes and an
outbreak of the flu.
Looking ahead, the government maintained its outlook that the economy will
continue "recovering," supported by an improvement in labor and income
conditions and the effects of fiscal spending.
It also repeated the risks to its outlook, citing uncertainty in overseas
economies and the effects of fluctuations in financial and capital markets.
There was no specific mention of the impact of U.S. trade disputes.
--MIXED CONSUMPTION DATA
On the domestic front, private consumption is picking up but there is a
mixed bag of indicators, said Hideyuki Ibaragi, director of macro-economic
analysis at the Cabinet Office.
The Cabinet Office's Private Consumption Integrated Estimates Index, which
is based on both supply- and demand-side data, posted the first rise in two
months in April, up 1.0% on month after falling 0.4% in March and rising 0.4% in
"After weak consumption in the January-March quarter, the weather was
milder in April, when there was firm demand for automobiles and spring and early
summer clothing as well as leisure and travelling," he said.
The total employee income -- the sum of average cash earnings per employee
multiplied by the number of workers -- rose a real 3.2% on year in April.
However, average cash earnings per regular employee rose just 0.8% on year
in April. In real terms, average wages showed no growth from a year before. The
recent weak trend was caused by the rising cost of living.
--WEAK CONSUMER CONFIDENCE
"The pickup in consumer confidence is marking time, particularly among the
households whose members are aged 60 years or older," Ibaragi said. "The recent
rise in gasoline prices and electricity costs is affecting sentiment."
He also pointed out that the share of households with people aged 65 or
older rose to 35.3% in 2015, up from 19.7% in 1995.
--MODEST EXPORTS, OUTPUT
Japan's exports are not so strong, either. The three-month moving average
of export volumes rose just 0.3% in May from the previous three-month period.
Export volumes of Japanese information goods (liquid crystal devices,
chip-making equipment, integrated circuits, etc.) to Asia have lost some steam
in recent months, up 16.6% in April from the level seen at the end of 2016,
after a recent peak of +20.3% in December last year.
The increase in industrial production is also "moderate" on slower demand
for electronic parts and devices used in smartphones.
However, semiconductor shipments to the world are expected to keep growing
in coming years, thanks to solid demand for Japanese chips used in data servers
and automobiles, Ibaragi said.
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: firstname.lastname@example.org