TOKYO (MNI) – Japan’s modest economic recovery is continuing based on solid exports and production amid firmer global growth even though consumption remains sluggish, the government said Thursday.
“A modest recovery continues, although with a delay in some areas,” the government said, maintaining its overall assessment for the fourth straight month after upgrading it in December for the first time in 21 months.
In its monthly report for April, the government revised up its view on the world economy for the first time in five months, saying it is “recovering moderately” thanks to stronger U.S. growth. Until last month it said there were some soft spots in the global economy.
The government repeated its warning that there remains much uncertainty about the outlook for overseas growth and the effects of financial market fluctuations.
On the domestic front, the government revised up its view on business sentiment for the first time in four months following the release of the Bank of Japan’s quarterly Tankan survey earlier this month, which showed a wide-spread improvement in corporate confidence.
“Exports have been increasing, led by demand from Asia for electronics parts used in smartphones,” said Hideyuki Ibaragi, director of macro-economic analysis at the Cabinet Office.
Asked whether the recent slower pace of auto sales in the U.S. would affect Japan’s exports, he told reporters: “The increase in exports is largely backed by demand from Asia and I think it will continue for now.”
Data released Thursday showed that Japan’s exports rose 12.0% on year in March, the fourth straight rise after an 11.3% gain in February, led by higher shipments of auto parts, optical equipment and steel due to a gradual pickup in global demand.
Exports to Asia surged 16.3% on year to a record high level. It was the fifth consecutive rise. Exports to the U.S. rose 3.5% y/y, the second straight rise, due to higher shipments of auto parts and motors. However, car exports to the U.S. fell.
The government continued to say consumption “remains in a pickup phase overall” but Ibaragi repeated his recent comments that it is still sluggish despite improving employment and income conditions.
“There aren’t many negative factors affecting private consumption. I hope it becomes better,” he told reporters.
The Cabinet Office’s Private Consumption Integrated Estimates index rose a real 0.2% on the month in February after a 1.0% gain in January and a 0.1% rise in December. The index was flat in the October-December quarter.
The Economy Watchers’ Survey sentiment index for Japan’s current economic climate continued to slip, falling 1.2 points to 47.4 in March on a seasonally adjusted basis, the third straight drop. Orders and capital investment were firmer but there are concerns over future profits due to uncertainty that firms will be able to transfer higher costs to their sales prices.