The government on Friday downgraded its assessment of the economy, adding to signs that China's economic slowdown amid its trade conflict with the United States has been weighing on production and exports.

"The Japanese economy is recovering at a moderate pace while weakness in exports and industrial production continues," the Cabinet Office said in a monthly report.

It maintained its view that the economy is seeing a moderate recovery on improving employment conditions and robust corporate earnings, but slightly changed its wording on exports and production from the previous report. It had said last month that "weakness is seen recently in exports and industrial production in some sectors."