REPEAT: MNI: Japan Govt Keeps View Modest Econ Pickup Intact

Repeats Story Initially Transmitted at 06:34 GMT Dec 21/01:34 EST Dec 21

     TOKYO (MNI) - The Japanese government on Thursday left its overall economic

assessment for December unchanged for the sixth straight month, repeating its

view that the domestic economy remains "in a moderate recovery" amid solid

global growth.

     It revised up its assessments of imports, capital investment and industrial

production while downgrading its view on public works spending.

     The government confirmed that an earlier slip in imports was temporary and

that it didn't indicate a slowdown in domestic demand.

     Imports are "showing signs of a pickup," the government said in its monthly

economic report. It is the first upgrade in 10 months. Last month it said the

pace of pickup in imports was stalling.

     The Bank of Japan's real import index gained 1.7% on month in October after

falling 3.8% in September.

     In the July-September quarter, orders for the latest Apple smartphones

models were slow, as some customers waited for the November release of the

iPhone X instead of rushing to buy the iPhone 8, which went on the market in

September.

     In October, imports of telephones (mostly smartphones) rose 11.8% on year

after slumping 34.4% in September.

     The government maintained its assessment of private consumption, which

accounts for about 60% of total domestic output, saying it is "picking up

moderately."

     Japan's economy for the July-September quarter posted a strong 0.6% rise on

quarter, or an annualized 2.5%, as a rebound in net exports offset a slump in

consumer spending caused by bad weather.

     The seventh straight quarterly expansion in GDP followed unusually strong

growth of 0.7% on quarter, or an annualized +2.9%, in April-June. The recent

annualized growth pace has been above Japan's potential growth rate estimated to

be just under 1%.

     The Cabinet Office's Private Consumption Integrated Estimates index, which

is based on both supply- and demand-side data, posted the first month-on-month

rise in two months in October, up 0.1%, after falling 0.5% in September and

being unchanged in August.

     Exports have been "picking up," thanks to strong demand for Japanese

chip-making machinery and chemicals as the usage of integrated circuits has

spread to many sectors, the government said. The assessment has been left

unchanged since being revised up in February 2017.

     The government upgraded its view on business investment in equipment for

the first time in six months, saying it is "increasing moderately," instead of

"picking up."

     The total amount of nominal capital investment rose to Y86.9 trillion in

the July-September quarter, recovering to the level seen before the 2007 global

financial crisis. It was the highest level since Y85.3 trillion recorded in

January-March 2007.

     Production is also "increasing moderately," instead of "picking up." It was

the first upward revision in 12 months.

     On the downside, the government downgraded its view on public investment

for the first time in two years after it posted the first quarter-on-quarter

drop in three quarters in July-September.

     Looking ahead, the government maintained its outlook that the economy will

continue "recovering moderately," backed 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.

     Earlier on Thursday, the BOJ also said it maintained its overall assessment

that the economy was expected to stay on a modest recovery trend, led by a

pickup in exports, factory output and business investment.

     The BOJ slightly upgraded its view on consumer spending, which it now sees

as "increasing moderately, albeit with fluctuations" instead of "increasing its

resilience."

     The BOJ also upgraded its assessment of business investment to "increasing"

from "increasing moderately," following a sharply revised up capex in Q3 GDP

data and solid investment plans seen in the BOJ's quarterly Tankan survey for

December.

     But the BOJ downgraded its view on public investment, which is "more of

less flat" while keeping its high levels. It was "increasing" earlier but the

effects of last fiscal year's supplementary budget have faded.

--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com