The economy is still on track for a moderate recovery from the March 2011 disasters but faces a threat from slowing growth in China, the government said Monday.

The Japanese economy "is on the way to recovery at a moderate pace due partly to reconstruction demand, although difficulties continue to prevail," the Cabinet Office said in its monthly report, using the same expression for a third consecutive month.

Industrial output "is still picking up slowly," exports "show signs of picking up," and private consumption is "increasing at a moderate pace," it said, retaining the same evaluations for all key components.

The report pointed to continued improvement in employment while underscoring that conditions remain severe because of the disasters.