The Japanese government said that against the background of the results of the latest survey, which indicated a recovery in corporate sentiment thanks to upbeat profits, it was decided to raise the assessment of business sentiment (for the first time in two months) to "improving" from "improving moderately as a whole".
Meanwhile, the overall assessment of economic conditions remained unchanged, as the improvement in business sentiment was not reflected in domestic demand, such as consumption and investment, to improve the overall economic picture. The government reported that the economy is "recovering moderately although some areas have stalled recently." The government also did not change its estimate of consumer spending, saying it was "picking up" in December. Wage growth has not kept pace with inflation while spending on travel and dining out was recovering, the report said. As for the inflationary situation, the government reported that the growth rate of consumer prices has been moderate recently. In addition, the government warned that global monetary tightening and concerns about the Chinese economy could be downside risks to Japan's economy.
Last week, the Bank of Japan said that in the three-month period (through December), business confidence of major Japanese manufacturers reached a nearly two-year high, with big non-manufacturers' sentiment rising to its highest level since 1991.