While noting the "economy is picking up slowly," the report, released on the office's website, said: "Exports show signs of picking up. Industrial production is picking up slowly. Corporate profits show movements of improvement, mainly among large firms."
Japanese exports, on which the economy is heavily reliant, have picked up with the weakening of the yen against the U.S. dollar, making Japanese exports cheaper. The Nikkei-225 issue Stock Average shot past the 15,300 point level early Monday on the Tokyo Stock Exchange for the first time since December 2007 as investors, encouraged by the weaker yen, bought stocks of exporters.
In its assessment the previous month, the Cabinet Office had said, "The Japanese economy is showing movements of picking up recently, while weakness can be seen in some areas."
In its May report, the Cabinet Office also said businesses' judgment on current business conditions showed signs of improvement, private consumption was picking up and that the employment situation showed signs of improvement recently, although some severe aspects still remained.
"Concerning short-term prospects, the recovery is expected to resume gradually supported by the improvement of confidence, the improvement of export conditions and the effect of the policy package and monetary policy," the May report said.
"However, slowing down of overseas economies is still downside risk of the Japanese economy. Also, attention should be paid to the employment and income situations over the future."
The May report comes on the heels of last week's government data showing gross domestic product grew at an annualized rate of 3.5 percent in the first quarter as exports and domestic demand rose. The quarterly improvement was up sharply from the 1 percent growth in the previous quarter, indicating the economic policies of Prime Minister Shinzo Abe's government are taking hold.