The government upgraded its view of Japan's economy yesterday in a bullish report that contrasted with the political uncertainty generated by this week's dissolution of parliament.

Separately, the Bank of Japan also said the economy was gathering strength, while strong machinery orders for June released yesterday reinforced the positive tone. In a monthly report, the Cabinet Office said the economy was "recovering at a moderate pace with both the corporate and household sectors improving". This showed significantly greater optimism than last month's assessment that the economy was "showing signs of shaking off weakness".