Japan's reports say economy dropped over China's reduced demand

Japan's government is considering a slight downgrade to its assessment of the economy in its monthly report for March as exports and factory output fell due to slowing demand from China, the Nikkei business daily reported on Thursday. In February, the government said the economy was recovering but noted weak data on corporate sentiment, capital expenditure and exports showed the U.S.-China trade war is hurting the outlook for the world's third-largest economy.

The government could slightly tweak the wording of its economic assessment to indicate a downgrade, the Nikkei report said without citing sources. The government's coincident indicator index fell for a third straight month in January, prompting the government to cut its view on the index, which showed the economy may have reached the peak of its long-term business cycle.