* This report is based on data and other information available at the time of the Bank of Japan's branch managers' meeting held today. The report summarizes the reports from all regional research divisions, mainly at the Bank's branches in Japan, and does not necessarily reflect a consensus of the Bank. The English translation is based on the Japanese original released on April 21, 2005.

April 21, 2005
Bank of Japan

According to reports from each of the nine regions in Japan, the economy is on a gradual recovery trend in most regions, although there seem to be some weak movements.

The economic assessments of seven out of nine regions indicated that the economy was on "a gradual recovery trend." All of these seven regions, however, noted that the recovery had recently "come to a pause," mainly because business sentiment had been worsening due to adjustments in IT-related sectors. Meanwhile, economic activity remained virtually flat in the Hokkaido and Tohoku regions.

Compared with the assessment in January 2005, at the time of the last branch managers' meeting, three out of eight regions¹ (Kinki, Chugoku, and Shikoku) revised their assessment slightly downward and other regions maintained their previous assessment.

Region	Assessment in April 2005	(Reference) Assessment in January 20052
Hokkaido	Economic activity remains virtually flat.	Economic activity remains virtually flat.
Tohoku	The economy has been at a standstill.	Recovery in the economy has recently come to a pause.
Hokuriku	The economy continues to recover gradually, although there seem to be somewhat weak movements mainly in production.	The economy continues to recover gradually, although there seem to be somewhat weak movements mainly in production.
Kanto- Koshinetsu	The economy is on a gradual recovery trend, although there seem to be some signs of weakness.	Not available1
Tokai	The economy continues to recover, although it recently seems to be coming to a pause.	The economy continues to recover, although it recently seems to be coming to a pause.
Kinki	The economy continues to be on a recovery trend as a whole, although there seem to be some weak movements.	The economy continues to recover as a whole, although exports and production are flat.
Chugoku	The pace of economic recovery is slowing.	The economy continues to recover, although its pace is becoming slower.
Shikoku	The economy continues to improve gradually, although it recently seems to be coming to a pause in some areas.	The economy continues to improve gradually as a whole, although there are some disparities among areas and industries.
Kyushu- Okinawa	The economy continues to recover mainly in manufacturing, albeit gradually.	The economy continues to recover, although the pace is becoming slower.

1 The Kanto-Koshinetsu region released its first report in April 2005, and therefore comparison with a previous assessment is not possible.

2 These assessments are excerpted from the "Review of Regional Economies by Eleven Branches of the Bank of Japan," available only in Japanese, released in January 2005.
Private consumption has been "improving" or "steady" in seven regions, while the Hokkaido and Tohoku regions reported it as somewhat weak.

Sales of large-scale retail stores picked up slightly compared with the second half of last year in the Kanto-Koshinetsu region, and they were steady in the Tokai region due to the opening of new stores. In the other regions, however, sales were somewhat weak primarily due to poor sales of spring apparel. On the other hand, sales of household electrical appliances have been steady, mainly in digital home appliances in all regions except the Hokkaido region, in which sales were below the previous year's level. In addition, sales of passenger cars either picked up or were steady in most regions, although they dropped in the Hokkaido region and were virtually flat in the Kanto-Koshinetsu region. As for tourism activity, while the Hokkaido and Shikoku regions saw a decrease in the number of tourists, outlays for travel, particularly overseas travel, were favorable in the Tohoku, Tokai, and Kyushu-Okinawa regions.

Compared with the previous assessment on private consumption, the Kinki region changed its assessment from "improving at a moderate pace" to "steady," and the Shikoku region from "showing some improvements" to "steady." Furthermore, the Kyushu-Okinawa region changed its assessment by omitting the phrase "lacking signs of improvement."

Business fixed investment has been on an increasing trend in all regions, mainly in manufacturing, and is likely to continue increasing in fiscal 2005.

Notable changes have not been made to the previous assessment on business fixed investment.

Production remained virtually "flat" in many regions. The Hokkaido region assessed production to be "increasing gradually," while the Chugoku region reported it as "showing some weak movements, but remains at a high level," and the Kinki region as "showing somewhat weak movements, mainly in IT-related goods and machinery."

Compared with the previous assessment on production, the Hokkaido region changed its assessment from "flat" to "increasing gradually," and the Tohoku region from "declining slightly" to "more or less flat." On the other hand, the Shikoku region revised its assessment downward, from "on a gradual uptrend" to "increase seems to be coming to a halt," and the Kyushu-Okinawa region from "increasing slowly" to "more or less flat." Also, the Chugoku region revised its assessment slightly downward.

As for the employment and income situation, labor market conditions have been on an improving trend in all regions, except in the Sanin area in the Chugoku region, which did not show any noticeable positive or negative movements. The Tokai region, in particular, indicated that this improvement was due to a high level of production and the boost in labor demand related to two large projects (the openings of the Central Japan International Airport and the 2005 World Exposition, Aichi, Japan). Regarding income and wages, the Hokkaido and Tohoku regions reported that income and wages were weak, but other regions assessed them to be improving, albeit at a moderate pace.

In comparison with the previous assessment on the employment and income situation, the Tokai region changed its assessment on new job offers from "flat at a high level" to "increasing gradually" and also the number of regular employees from "picking up" to "increasing." Moreover, the Kinki region and the Kyushu-Okinawa region revised its assessment slightly upward.

Region	Private Consumption	Business Fixed Investment	Production	Employment and Income
Hokkaido	Sluggish	Picking up	Increasing gradually	The employment situation has been improving, although it remains severe. Wages continue to be weak.
Tohoku	Not showing any noticeable positive or negative movements as a whole	Continues to be at a high level, mainly in manufacturing	More or less flat	Labor market conditions have been on an improving trend. Income has not picked up notably.
Hokuriku	Continues to improve	Continues to be above the previous year's level, mainly in manufacturing	Virtually flat as a whole	The employment situation is on an improving trend as a whole. Wages have been above the previous year's level.
Kanto- Koshinetsu	Remains steady as a whole	Continues to increase, mainly in manufacturing	Almost flat on average	The employment situation is improving as a whole. Wages seem to be picking up as a whole.
Tokai	Continues to be steady	Continues to increase steadily	Virtually flat, albeit with adjustments in some IT-related sectors	The situation for both employment and income is improving.
Kinki	Steady as a whole, although there are some disparities among areas	On an uptrend as a whole	Showing somewhat weak movements, although orders seem to be picking up in some goods	The employment situation is improving gradually. Household income is showing signs of bottoming out.
Chugoku	Showing improvements	At a high level	Showing some weak movements, but remains at a high level	The employment situation seems to be improving. Wages have gradually stopped declining.
Shikoku	Remains steady as a whole, albeit with some mixed movements	Continues to recover mainly in manufacturing	Increase seems to be coming to a halt as a whole	The employment and income situation is showing signs of improvement.
Kyushu- Okinawa	Continues to be steady	Increasing mainly in manufacturing	More or less flat, although it is at a high level as a whole	The employment situation has been on an improving trend, albeit a gradual one. Total cash earnings are still below the previous year's level, but the year-on-year rate of decline has been narrowing.

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Appendix: Prefectures Included in Each Region

Region	Prefectures
Hokkaido	Hokkaido
Tohoku	Miyagi, Aomori, Akita, Iwate, Yamagata, and Fukushima
Hokuriku	Ishikawa, Toyama, and Fukui
Kanto- Koshinetsu	Tokyo, Chiba, Saitama, Ibaraki, Tochigi, Gunma, Kanagawa, Niigata, Yamanashi, and Nagano
Tokai	Aichi, Shizuoka, Gifu, and Mie
Kinki	Osaka, Kyoto, Shiga, Nara, Wakayama, and Hyogo
Chugoku	Hiroshima, Okayama, Tottori, Shimane, and Yamaguchi
Shikoku	Kagawa, Tokushima, Ehime, and Kochi
Kyushu- Okinawa	Fukuoka, Saga, Oita, Nagasaki, Kumamoto, Miyazaki, Kagoshima, and Okinawa

For further information, please contact: Masato Kato (Mr.), Regional Economy, Research and Statistics Department Tel: +81-3-3277-1357