Gov't maintains economic assessment but warns about high unemployment+

TOKYO, Sept. 8 Kyodo - The government maintained its key assessment of the Japanese economy Tuesday for the second consecutive month but added a warning about the remaining severity by referring to the nation's record-high unemployment rate.

''The economy has been showing movements toward picking up recently while in a
difficult situation, such as the rise in the unemployment rate to an all-time
high,'' a monthly economic report by the Cabinet Office said.
It is rare for the government to note particular concerns about the
unemployment rate in its economic report used as a basis for administering
economic and fiscal policy. But the government left its assessment of the
current state of the nation's economy unchanged due to improvements in
corporate earnings and capital investment.
Up to July, the government had upgraded its economic assessment for three
straight months.
''Stimulus packages such as those on the auto sector had positive effects, but
it has yet to sufficiently lead to a self-sustaining recovery in private
demand,'' Economic and Fiscal Policy Minister Yoshimasa Hayashi said at a news
conference.
He cautioned that the deteriorating job market is a key risk factor to the
domestic economy, along with recent record falls in consumer prices and
uncertain prospects for the global economy.
With the Democratic Party of Japan set to take power following its landslide
victory in a recent election that ousted the long-ruling Liberal Democratic
Party, outgoing Hayashi said he wants the new government to ''carefully''
manage the current fragile economic condition.
Japan's economy grew for the first time in five quarters in the three months
through June as the stimulus package and improved overseas demand helped the
country pick up from its worst postwar recession.
But the nation's unemployment rate, considered a lagging economic indicator,
soared to a record 5.7 percent in July, fueling concerns that subsequent
sluggish consumption may hamper an economic recovery.
''The employment situation is becoming increasingly severe,'' the government
said in the latest economic report, downgrading its evaluation on employment
for the first time in four months.
While maintaining most of the wording used in describing each aspect of the
economy, such as exports, the government upgraded its assessment on business
investment, corporate profits and housing construction, noting the pace of
their deterioration has slowed.
As for corporate profits and business investment, it was the first upgrading in
63 months and 21 months, respectively.
On consumer spending, the government continued to say it is picking up.
The government upgraded its valuation of the global economy as a whole for the
third consecutive month as it saw better economic conditions in the United
States, Europe and Asia, also due to stimulus packages.
==Kyodo
2009-09-08 23:03:42