The government upgraded its assessment of the economy for the first time in seven months in a monthly report released Friday, citing a pickup in private consumption.


“The Japanese economy is recovering at a moderate pace,” the Cabinet Office said in the report. The expression was previously used in March 2014, a month before the government raised the consumption tax from 5 percent to 8 percent and consumer sentiment was subsequently hurt.


In December, the Cabinet Office described the economy as “on a moderate recovery,” an expression slightly weaker than the latest phrase.


The upgrade in the monthly economic report for January makes it more likely that the government will confirm that the economy is in its second-longest postwar expansion cycle. Still, Japan has yet to beat deflation despite the government saying the economy has entered a “new phase.”


“With consumption picking up, improvements have been spreading (beyond the corporate sector) to households. This led to the upward revision,” a Cabinet Office official said.


The office also lifted its view on private consumption for the first time in seven months, reflecting an improvement in consumer sentiment that was cooled last year by poor weather conditions. It dropped the word “moderately” to say consumption is “picking up.”

Compared with the period leading up to the 2014 sales tax hike that saw last-minute buying, however, consumption is still not strong enough, the official said.


Tight labor market conditions also prompted an upward revision to the government’s view on employment for the first time since December 2015. “The employment situation is improving steadily,” the January report said.


Japan’s jobless rate improved to a 24-year low of 2.7 percent in November and the availability of jobs has hit the best level in over four decades.


As consumers’ reluctance to increase spending has been attributed to tepid wage growth, Prime Minister Shinzo Abe is calling on companies to raise pay by 3 percent in upcoming negotiations between management and labor unions.


The office maintained its view on other key components of the economy such as business investment and output. Going forward, attention should be given to uncertainty in overseas economies and fluctuations in financial and capital markets, it said.


Japan’s economy has been getting a boost from robust exports in line with global economic growth.