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Regional Economic Report (Summary) (January 2008)*

  • This report summarizes the reports from all regional research divisions, mainly at the Bank's branches in Japan, and is based on data and other information gathered for the Bank of Japan's branch managers' meeting held today. The English translation is based on the Japanese original.

January 15, 2008
Bank of Japan

According to reports from each of the nine regions in Japan, the economy as a whole was on a moderate expansion trend, as most regions continued expanding or recovering, albeit with some sluggishness and regional differences.

Specifically, exports and production continued to increase. Business fixed investment was also on an increasing trend in all regions. Private consumption was steady as a whole, with employment and household income on a gradual increasing trend. Housing investment, however, dropped substantially in all regions, mainly due to the delay in construction starts affected by the revised Building Standard Law coming into force. Under these circumstances, partly due to higher materials prices, business sentiment was somewhat cautious, especially among small firms.

Assessments showed that regional differences remained: Kanto-Koshinetsu, Tokai, and Kinki described their economic activity as expanding, while Hokkaido described it as being somewhat sluggish.

Compared with the assessment in October 2007, at the time of the last branch managers' meeting, five out of nine regions maintained their previous assessment. Hokkaido, Tohoku, Hokuriku, and Kanto-Koshinetsu revised their assessments slightly downward. Tohoku indicated that some sluggishness was observed in private consumption. Hokkaido, Hokuriku, and Kanto-Koshinetsu reported that housing investment decreased. In addition, Hokkaido indicated sluggishness in household income and Hokuriku pointed out lower corporate profits caused by higher materials prices. Kanto-Koshinetsu reported a somewhat slower pace of increase in business fixed investment.

Table : Regional Economic Report (Summary) (January 2008)<
Region Assessment in January 2008 Revision of
assessment
from the
previous
meeting
Assessment in October 2007
Hokkaido Economic activity is somewhat sluggish. Slightly downward. Economic activity is flat.
Tohoku The economy as a whole continues to recover gradually. Slightly downward. The economy continues to recover steadily, albeit gradually.
Hokuriku The economy is recovering gradually, although there seems to be some sluggishness. Slightly downward. The economy is recovering gradually.
Kanto-Koshinetsu The economy is on a moderate expansion trend. Slightly downward. The economy is expanding gradually.
Tokai The economy is expanding gradually. Unchanged. The economy is expanding gradually.
Kinki The economy is expanding gradually. Unchanged. The economy is expanding gradually.
Chugoku The economy continues to recover as a whole. Unchanged. The economy continues to recover as a whole.
Shikoku The economy continues to pick up gradually. Unchanged. The economy continues to pick up gradually.
Kyushu-Okinawa The economy continues to recover gradually. Unchanged. The economy continues to recover gradually.

Private consumption was gradually increasing or recovering in the Kanto-Koshinetsu and Tokai regions. In other regions, it was "steady," "picking up," or "flat."

There were reports that at large retail stores sales of food were solid, while those of apparel seemed to be sluggish. All regions reported that sales of household electrical appliances continued to be favorable, particularly for digital appliances, such as flat-panel televisions, and for high-value-added white goods. Sales of passenger cars picked up as a whole, assisted partly by the introduction of new models, despite a decline in sales of small cars with engine sizes of 660 cc or less. Meanwhile, travel expenses remained steady on the whole, although there were regional differences.

Compared with the previous assessment of private consumption, Hokuriku revised its assessment slightly upward, while Tohoku revised its assessment slightly downward.

Business fixed investment continued to be on an increasing trend in all regions reflecting high corporate profits, driven mainly by manufacturers' investments to expand their production capacity.

Compared with the previous assessment of business fixed investment, Kanto-Koshinetsu revised its assessment slightly downward.

Most regions reported that production was "increasing" or "maintaining a high level." Meanwhile, Hokkaido reported that it was "generally flat."

By industry, in processing industries, many regions reported that production of electronic parts and devices was favorable, particularly production of those used for digital appliances. Production of general machinery remained at a high level, especially that of semiconductor manufacturing equipment and machine tools, and transportation equipment, particularly for exports. Trends in materials industries still varied: chemicals, and paper and pulp maintained a high level of production, while materials used for construction -- namely cement, ceramics and glass, as well as lumber and wood products -- showed sluggishness.

Compared with the previous assessment of production, Shikoku revised its assessment upward, while Hokuriku, Kanto-Koshinetsu, and Kyushu-Okinawa revised their assessments slightly upward.

As for the employment and income situation, many regions reported that the employment situation continued to improve. However, there were still substantial regional differences in the assessments of labor market conditions, ranging from "the ratio of job offers to applicants is at a high level" in Tokai to an assessment that "the employment situation remains flat" in Hokkaido.

Many regions reported that household income was gradually increasing, improving, or recovering. Kinki reported that household income was "steady." Chugoku, however, reported that it was "generally flat," and Hokkaido reported that it was "sluggish," partly due to the fact that firms continued to restrain labor costs.

As for the employment situation, all regions kept their assessments unchanged. As for income, however, Hokkaido and Kinki revised their assessments slightly downward.

Table : Regional Economic Report (Summary) (January 2008)<
Region Private consumption Business fixed investment Production Employment and income
Hokkaido Continues to be flat. Increasing. Generally flat. The employment situation remains flat.
Household income is sluggish.
Tohoku Steady as a whole. Increasing, mainly in manufacturing. Maintaining a high level. The improvement in the employment situation has come to a standstill.
Household income continues to improve gradually.
Hokuriku Continues to be picking up, although there seems to be some sluggishness. Likely to increase mainly in manufacturing, exceeding the high level of fiscal 2006 by slightly over 10 percent. The pace of increase is accelerating slightly. The employment situation continues to follow an improving trend.
Household income is increasing, albeit gradually.
Kanto-Koshinetsu On a gradual increasing trend. On an increasing trend. Increasing. The employment situation continues to improve.
Household income continues to increase gradually.
Tokai On a gradual recovery trend. Continues to increase. Increasing. The number of full-time employees is increasing.
Meanwhile, the ratio of job offers to applicants is at a high level, although it has recently fallen slightly.
Household income is improving.
Kinki Steady. Increasing. Increasing. The employment situation continues to improve.
Household income is on a steady trend.
Chugoku Remains generally steady, although there seems to be some sluggishness. Solid. On an increasing trend. The ratio of job offers to applicants continues to be at a relatively high level.
Household income remains generally flat.
Shikoku Steady as a whole. Increasing, mainly in manufacturing. Increasing gradually. The employment situation continues to improve gradually.
Household income is gradually recovering on the whole.
Kyushu-Okinawa Steady. Increasing. On an increasing trend. The employment situation is improving gradually.
Household income is improving gradually.

Appendix: Prefectures Included in Each Region

Table : Appendix: Prefectures Included in Each Region
Region Prefectures
(a) Hokkaido Hokkaido
(b) Tohoku Aomori, Iwate, Miyagi, Akita, Yamagata, and Fukushima
(c) Hokuriku Toyama, Ishikawa, and Fukui
(d) Kanto-Koshinetsu Ibaraki, Tochigi, Gunma, Saitama, Chiba, Tokyo, Kanagawa, Niigata, Yamanashi, and Nagano
(e) Tokai Gifu, Shizuoka, Aichi, and Mie
(f) Kinki Shiga, Kyoto, Osaka, Hyogo, Nara, and Wakayama
(g) Chugoku Tottori, Shimane, Okayama, Hiroshima, and Yamaguchi
(h) Shikoku Tokushima, Kagawa, Ehime, and Kochi
(i) Kyushu-Okinawa Fukuoka, Saga, Nagasaki, Kumamoto, Oita, Miyazaki, Kagoshima, and Okinawa

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