A slowdown in Japan's recovery is less severe than some feared, a revised measure of economic conditions showed today.
But economists said an adjustment in the economy could last a while, with exports and industrial production, which softened recently, the key to gauging when the recovery picks up again.
The government revised up the diffusion index (DI) of coincident economic indicators for November to 60.0 from a preliminary 44.4 today, putting it above the critical reading of 50 for the first time in four months.
"The chances of an economic downturn have receded," said Mr Naoki Iizuka, chief economist at Dai-ichi Life Research Institute.
A preliminary figure had put the coincident index, an indicator of current economic conditions, below the neutral 50 reading for four straight months, fuelling concern that the economy was running out of steam.
Typically, chances of a downturn during an economic cycle increase when the coincident index stays below 50 for three straight months, and a downturn is confirmed after around five straight months below 50.
Mr Iizuka said the coincident DI needed to stabilise above 50 for about three straight months before it could be said the economy would avoid a downturn, and it was early to be optimistic.
"The December coincident index may fall back below 50 again. I think the index will hover around 50 for a while," he said.