The government gave the economy an upbeat assessment in a monthly report issued Monday.
It cited rising personal spending, rising housing construction and surging exports, especially to China.
"The economy continues recovering steadily, supported by business investment and exports," the Cabinet Office said in its monthly economic report for March.
The overall economic assessment was unchanged from its assessment for February.
The government was particularly upbeat on three components in the March report.
It stated that exports "are rising rapidly," private consumption "is picking up," and housing construction "is increasing."
The report says industrial production and capital investment are growing, while corporate profits continue to improve.
Although the employment situation continues to be severe, movements of an incipient recovery can be seen, it said.
The report says consumer prices remain flat but wholesale prices have risen slightly due to increases in chemical product, steel and nonferrous metal prices.
Looking ahead, Japan's economy is expected to keep improving, spurred by pickups in the world economy, which the report says is "recovering steadily."
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