TOKYO, Aug 11 (Reuters) - Japan's economy and consumer spending are showing signs of picking up, though the situation remains difficult and the jobs market is still deteriorating, the government said in a monthly report on Tuesday.
The economy is expected to pick up in the coming months as companies finish adjusting inventories, overseas economies improve and the effect of policy measures spreads, it said.
With concerns about a weakening labour market offsetting gains in private consumption spurred by government subsidies for energy-efficient goods, the government kept its assessment of the economy unchanged.
"Japan's economy has recently shown signs of picking up while in a difficult situation," the report said, the same wording used in last month's report.
It stuck to the view that the jobs market is deteriorating rapidly, with the unemployment rate hovering just below a record 5.5 percent and companies still feeling they are saddled with excess workers.
The government also stuck to its assessment that consumer spending is showing signs of recovering as so-called eco subsidies lure shoppers to buy low-emissions cars, flat-panel TVs and other home appliances that consume less energy.
Japan's economy is expected to have grown 1.0 percent in the April-June quarter after contractions of 3.8 and 3.6 percent in the previous two quarters -- the biggest and second-biggest falls since World War Two. The Cabinet Office will release GDP data on Aug. 17.
A steady recovery in exports and an uptick in private consumption will likely fuel the first growth in five quarters, but analysts expect the economy to remain fragile as many companies slash jobs and cut back on capital spending, weakening domestic demand. The government reiterated its view that exports are picking up, with shipments to Asia rising and those to the United States and Europe showing signs of improving. It maintained its assessment that industrial output is also picking up, as manufacturers claw back production cuts from last year.
The government also left unchanged its grim assessment of corporate profits and capital expenditure as the overall level of economic activity stays low. Companies are likely to reduce spending on plant and equipment by a lot, because sales and earnings are falling at a rapid pace, the report said. (Reporting by Stanley White; Editing by Hugh Lawson and Michael Watson)