TOKYO (Reuters) - Japan's government gave a weaker assessment of capital expenditure in September for the first time in 10 months, while giving an improved view on private consumption, reflecting the fragility of the world's third largest economy.


The government stuck to its overall economic assessment in its monthly economic report issued on Friday, which described the economy as being in moderate recovery while still showing weakness.


"The economy is on a moderate recovery, while weakness is seen recently," the Cabinet Office said in the report, using the same description that it has stuck with since March.


The assessment comes as the Bank of Japan holds a monetary policy meeting next week. It follows a recent batch of data showing weakness in exports, factory output and household spending, and a surprise gain in core machinery orders.


With growth remaining weak and inflation slipping far below the BOJ's 2 percent target, many analysts expect the central bank to ease again at its Sept. 20-21 meeting, when it will review the effects of its monetary stimulus.


"A pickup in capital spending is stalling," the monthly report said. "As for the outlook, capital spending is expected to increase on the back of improvement in corporate profits."

The assessment on capital spending marked an downgrade from last month, when it was said to be showing a pickup.

On the other hand, the government raised its assessment on private consumption, which constitutes about 60 percent of the economy, saying that it is holding firm as a whole.

That marked the first upward revision since May 2015. Previously, it said private consumption was largely flat as consumer sentiment was stalling.

The government also slightly raised its views on housing construction and business sentiment.

Japan's economy grew at an annualized rate of 0.7 percent in April-June, slowing sharply from the prior quarter's 2.1 percent growth led by leap year effects, as exports and capital spending sagged.

(Reporting by Tetsushi Kajimoto; Editing by Simon Cameron-Moore)