By Kaori Kaneko

TOKYO Japan's employment trends showed "improvement recently", the government said in its latest monthly assessment of the economy, noting a decline in the jobless rate and the positive impact of bigger wage rises awarded by major firms.

It was the first time that the government had upgraded its assessment of the employment situation in 11 months. In May, the government had said the employment situation was "picking up".

The government maintained its overall assessment of the economy for the month, saying it was "recovering moderately" thanks to solid consumer spending and capital expenditure. But it also remained cautious about the potential risks of a global economic slowdown, price increases and financial market volatility.

Japan's jobless rate fell in April from the previous month as a result of the post-pandemic economic recovery and the nation's chronic labour shortages.

In annual labour talks, Japan's major companies pledged the biggest wage hikes in about three decades for this fiscal year.

A Cabinet Office official said that the wage hikes would be reflected in salaries with a time lag but that some firms have already started raising wages.

Prime Minister Fumio Kishida's government sees sustaining wage hikes as key to shoring up households' purchasing power, needed to encourage economic growth. He said on Wednesday his government would mobilise all available policy tools to ensure wage growth.

Both private consumption and capital spending were "picking up", the June report said, maintaining the assessment from May.

The Cabinet Office described corporate profits as "improving moderately overall" in the report after upbeat corporate results in the first quarter.

Business sentiment at big Japanese manufacturers edged up in June, staying in positive territory for a second straight month, a Reuters poll showed on Wednesday.

(Reporting by Kaori Kaneko; Editing by Simon Cameron-Moore)