Though the economy remains in in contraction with continuing weakness in corporate investment, the Economic Planning Agency said in its monthly economic report Tuesday that "there is a whiff of change in the air."

The EPA said there are signs the economy is finally beginning to revive or that it will do so in the near term.

Cabinet ministers, however, were not optimistic, and gave their own mixed assessments.

EPA chief Taichi Sakaiya said, "(I have) a feeling that the economy may be about to bottom out," while Finance Minister Miyazawa said brighter spots certainly are apparent for the economy but have to be assessed more cautiously.

In a press briefing, an EPA official said contradictory economic indicators often appear just prior to an economic turnaround but that it was far too early to predict whether more bright signs can be expected soon.

The report said that consumer spending, a category responsible for about 60 percent of the nation's gross domestic output, is still sluggish due to declining personal income and less spending.

In addition, capital investment by firms continues to drop, especially by small and midsize companies.

Meanwhile, housing investment, another key benchmark, remains depressed as less condominiums were bought.

In one bright spot, the report mentions that public works spending is beginning to have an impact as the central and local governments accelerate the timing of public works contracts.