The Japanese government has, for the first time in its monthly economic report, upgraded its assessment of factory output, indicating a recovery in production and suggesting that it may have bottomed out.
The government also raised its assessment of imports and public works, while keeping the overall economic assessment unchanged for three consecutive months. There were no changes in the evaluations of other components such as private consumption and capital expenditure.
The monthly report stated, "Although it appears to have stalled recently, the Japanese economy is recovering at a moderate pace."
The report was presented at a meeting attended by relevant cabinet ministers, ruling coalition lawmakers, and Bank of Japan (BOJ) Governor Kazuo Ueda.
The report noted, "While manufacturing activity has declined due to some automakers suspending production and shipments, industrial production has recently shown signs of recovery."
A cabinet official involved in compiling the monthly report said that for the first time since May last year, the government has upgraded its assessment of factory output, indicating signs of recovery.
A scandal at Toyota's compact car division, Daihatsu, led to a suspension of production and shipments, dampening automobile consumption in the first quarter.
Additionally, the earthquake in the Noto Peninsula, northwest of Tokyo, severely affected factory activities in the automotive and electronics sectors, causing disruptions in production and shipments.
The change in the assessment of industrial output could indicate that these temporary adverse factors affecting factory activities have eased.
Earlier this month, GDP data released by the Cabinet Office showed that due to sluggish consumption, the Japanese economy contracted at an annualized rate of 2% in the first quarter. Analysts expect the economy to rebound this quarter, but the growth is likely to be modest.
Last month, in a significant policy shift, the Bank of Japan ended its negative interest rate and yield curve control policy, raising interest rates for the first time since 2007, while facing pressure for further rate hikes.
