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japan's government raised its assessment of the economy for the first time in more than a year as signs of improving consumption boosted optimism about a broad recovery.

"japan's economy is recovering at a moderate pace, although some areas appear to still be stagnating," japan's cabinet office said in its monthly economic report for august on thursday.

this is the first time in 15 months since may 2023 that japan has raised its assessment of the economy.

consumption is picking up as the impact of transport disruptions is easing for some automakers, the cabinet office wrote in a report, while an increase in household disposable income and temporary cuts in income and resident taxes are also boosting consumption.

however, this summer's extreme heat has brought mixed results for consumers. while demand for cooling products such as air conditioners, parasols and ice cream has increased, traffic to theme parks and restaurants has declined.

the cabinet report also expects import prices to fall in the future, adjusted for the recent weakening trend of the yen, while the assessment of exports remains unchanged.

the government also upgraded its assessment of housing construction for the first time in more than two years from a "weak tone" to "almost flat", attributing the change to a halt in the decline in owner-occupied housing construction.

earlier this month, government data showed japan’s economy grew at an annualized rate of 3.1% in the second quarter, much faster than expected. the rebound after a slump at the start of the year was largely due to strong growth in consumption.