The Economic Planning Agency maintained its assessment of the economy in its report for July released Friday, following two successive months of upgrading.
"Moves toward a self-sustained recovery are gradually strengthening, centering on the corporate sector," the agency reckhoned, maintaining the wording from its previous assessment in June.
The agency refrained from upgrading the assessment this month because it has yet to find signs of a spread in corporate capital spending or a pickup in personal consumption, said Takashi Omori, a senior official at the EPA Research Bureau.
"Personal consumption remains broadly flat," while "the recovery in investment in plants and equipment has become clear," the agency said of the major engines for private demand, using the same expressions as in June.
On private-sector capital investment, Omori pointed to the possibility that big companies are not as robust in their investment plans for fiscal 2000 as indicated in the Bank of Japan "tankan" survey released July 4.
Large companies predicted a 4.6 percent increase in their fiscal 2000 investment, a turnaround from the previous forecast in March of a 0.6 percent drop, according to the quarterly report for June.
Looking closely, however, Omori said he noticed these companies opted for smaller investment for fiscal 1999 than they predicted in March, which indicates the June upswing was caused merely by leftover plans from the previous fiscal year.
"The economy has not yet got on a sustainable recovery path," the EPA official reiterated.
As to other economic factors, the agency upgraded its assessment of the employment situation and business confidence, because of a drop in the jobless rate to 4.6 percent in May from April's 4.8 percent and an overall improvement in the tankan.
The assessment on exports was brought down, however, since the higher yen against the euro is slowing exports to Europe, it said.