TOKYO (Reuters) - Japan's government on Wednesday slashed its view on the economy for November in its first such downgrade in 10 months, as weak demand weighed on capital spending and consumer expenditure.

Authorities also cut their view on capital expenditure for the first time since December 2021, saying the pace of recovery was "pausing".

The new assessment by the Cabinet Office came after data last week showed the economy shrank in July-September for the first time in three quarters as demand waned.

"The economy is recovering moderately, although some areas showed stalemate recently," said the report issued by the Cabinet Office on Wednesday. It was the first time the government has cut its view on the overall economy since January.

"While business conditions and firms' earnings continue to improve, the strength of the corporate sector is not necessarily translating into wages and investment," an official at the Cabinet Office said.

"Domestic demand such as corporate investment and consumer spending lack strength," he said.

Although the government retained its assessment that consumer expenditure was "picking up" in November, inflation squeezed consumer goods spending, while spending on services such as eating out maintained an uptrend.

In a bid to soften inflation's hit to the economy, Prime Minister Fumio Kishida's government compiled this month a package of measures that will involve spending of more than 17 trillion yen ($113 billion).

The government expects the economy to continue to recover moderately but there are risks such as those from global monetary tightening and the Chinese economy.

Close attention needs to be paid to rising prices, the Middle East situation as well as financial market fluctuations, the report said.

($1 = 149.6200 yen)