Japan's government raised its assessment of the economy in March for the third consecutive month, saying factory output is showing signs of a pickup and that capital expenditure is bottoming out as the economy shakes off a mild recession last year.
The government raised its assessment of corporate profits and the labour market at a time a weak yen is boosting exporters' earnings and there is an increase in the number of available jobs.
The government reiterated that it expects the Bank of Japan to take bold steps to meet a 2 percent inflation target as part of a push to escape nagging deflation and to revive the economy.
"There are still some weak sectors, but the economy is showing signs that it is picking up," the Cabinet Office said in its monthly economic report released on Friday.
This was an upgrade from last month, when the government said the economy had bottomed out.
The report marked the third straight month that the government upgraded the economic assessment, which is the first time since a string of three consecutive upgrades that ended in July 2009.
The government said industrial production is showing signs of picking up as car makers increased output to meet demand in the United States, the Cabinet Office report showed.
That was an improvement from last month when the government said factory output had bottomed out.
The government turned more positive on capital expenditure, saying it is bottoming out after revised gross domestic product (GDP) for the fourth quarter showed capital expenditure fell less than initially reported, according to the Cabinet Office.
Corporate profits at large firms are improving, and the labor market is also showing signs of improvement, the Cabinet Office said.
Japan's GDP was flat in October-December from the previous quarter, revised data showed, as capital expenditure and private consumption held firm, showing the economy had escaped from a mild recession.
Prime Minister Shinzo Abe, who led his Liberal Democratic Party to a landslide election victory in December, has called for aggressive monetary easing and heavy fiscal spending to beat persistent deflation, helping to drive down the yen and push up stock prices.
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