MNI: Japan Govt Upgrades Economic View, Private Consumption

MNI (TOKYO) - Japan’s government upgraded its overall economic assessment in August and its view on private consumption, both the first upward revision in 15 months, the Cabinet Office said on Thursday.

The government said the Japanese economy is recovering at a moderate pace, although it recently appears to be pausing “in part."

Private consumption had “shown movements of picking up recently, while weakness remains in some sectors,” which refer to slowing traveling and sentiment improvement.

An official at the Cabinet Office told reporters that compensation of employees on a real basis rose 0.8% y/y in the second quarter, the first rise since Q3 2021, boosting consumption. A moderate rise of eating out continued, while the suspension of automobile shipments slowed, the official said.

OPTIMISTIC OUTLOOK

The inflation-adjusted real wages, a barometer of households' purchasing power, turned positive in June for the first time in 27 month, up 1.1% compared to May's 1.4% decline, government data showed.

Assessment of other components, such as capital investment, industrial production and exports, remained.

As for the near-term outlook, the government maintained its optimistic view, saying the economy is expected to continue recovering at a moderate pace with the improved employment and income situation, supported by its policies.

However, the government maintained its cautious view, noting slowing of overseas economies presented a downside risk to the Japanese economy, including the effects of continued high interest rate levels in the U.S. and Europe and “the lingering stagnation of the real-estate market in China.”

“Full attention should be given to price increases, the situation in the Middle East and fluctuations in the financial and capital markets,” the office noted.

The government left its assessment on overseas economies for the second straight month, adding overseas economies are recovering, although stagnation is observed in some regions.