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Regional Economic Report (Summary) (January 2011)*

  • 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 17, 2011
Bank of Japan

Many regions in Japan judged that there were signs of a moderate recovery on the whole, but seven regions (Hokkaido, Hokuriku, Kanto-Koshinetsu, Tokai, Kinki, Chugoku, and Shikoku) reported that the recovery seemed to be pausing or had paused recently.  Compared with the assessment in October 2010, a larger number of regions observed that the pace of improvement seemed to be pausing.

An increasing number of regions reported the following as background to these developments: (1) weaker exports due to inventory adjustments in IT-related goods and the slowdown in overseas economies; (2) a reverse in demand for some durable consumer goods following the sharp increase; and (3) weaker production affected by these two factors.

Table : Regional Economic Report
Region Assessment in October 2010 Difference
between
assessments1
Assessment in January 2011
Hokkaido The economy has continued picking up, although economic conditions as a whole remain severe. lower right The economy seems to have paused recently, although it has continued picking up.
Tohoku The economy is picking up. unchanged The economy is picking up as a whole, although the recovery seems to be pausing particularly in manufacturing.
Hokuriku The economy has continued picking up as a whole, although there remains some severity in economic conditions. lower right The economy is recovering moderately, but improvements have slowed.
Kanto-Koshinetsu The economy is recovering moderately, but improvements have slowed.  Differences among regions and industries also remain. lower right The economy is recovering moderately, but the recovery seems to be pausing.  Differences among regions and industries also remain.
Tokai The economy has continued picking up, but the pace of improvement seems to have recently slowed sharply. lower right The economy has paused.
Kinki The economy, with some severity in employment, is recovering moderately. lower right The economy has recently paused, although it has been on a moderate recovery trend.
Chugoku The economy is recovering moderately, but the pace of recovery has been slowing. lower right The recovery in the economy seems to be pausing.
Shikoku The economy is picking up moderately, although economic conditions as a whole remain severe. lower right The pick-up in the economy seems to be pausing.
Kyushu-Okinawa The economy is recovering moderately, although the employment and income situation remains severe. unchanged The economy has continued to recover moderately as a whole, although a decline in demand is seen following a last-minute increase in some goods.
  1. With regard to the difference between assessments, arrows pointing to the upper right and lower right indicate changes in the pace of improvement or deterioration compared with the previous assessments, respectively. For example, an acceleration in the pace of improvement or deceleration in the pace of deterioration is indicated with an arrow pointing to the upper right. A horizontal arrow pointing to the right indicates that the pace of improvement or deterioration in economic conditions has remained unchanged compared with the previous assessments.

Public investment was declining in all regions.

As for business fixed investment, five regions (Hokkaido, Kinki, Chugoku, Shikoku, and Kyushu-Okinawa) reported that it was picking up, had begun to pick up, or had increased albeit remaining at a low level.  Two regions (Hokuriku and Kanto-Koshinetsu) reported that business fixed investment had stopped declining.  Meanwhile, the Tokai region reported that business fixed investment had begun to pick up but the pace had slowed somewhat, whereas the Tohoku region reported that it had been declining but was starting to show some signs of improvement.

By industry, business fixed investment in manufacturing was concentrated in maintenance and replacement investments as well as investments to expand production capacity.  A further increase in investment plans for new products and research and development as well as investment for improving business efficiency were also reported.  As for nonmanufacturing, several regions continued to report large-scale investments in infrastructure-related sub-industries, and several regions reported the opening of new stores in retailing.

Six regions (Hokkaido, Tohoku, Hokuriku, Kanto-Koshinetsu, Kinki, and Kyushu-Okinawa) continued to report that private consumption had been picking up or that its decline had been coming to a halt as a trend, because the degree of severity in the employment and income situation had eased.  While many regions reported signs of picking up such as in sales of winter apparel, all regions pointed to a decline in demand following a last-minute increase ahead of the expiration of policy measures for purchasing some durable consumer goods.  The Chugoku region reported that the pick-up in private consumption was pausing; the Tokai and Shikoku regions reported that private consumption remained relatively weak as a whole.

By goods, many regions reported that sales at large retail stores had increased compared with the previous year or the rate of decrease had moderated, mainly due to the pick-up in sales of winter apparel.  As for sales at convenience stores, although they had fallen back in response to a last-minute increase in demand prior to the rise in the tobacco tax, several regions reported that sales were picking up.  Meanwhile, seven regions (Hokkaido, Tohoku, Hokuriku, Kanto-Koshinetsu, Tokai, Shikoku, and Kyushu-Okinawa) reported that travel-related demand had either increased or stopped decreasing.  All regions saw a sharp decrease in automobile sales following the last-minute increase in demand ahead of the expiration of subsidies for purchasing environmentally friendly cars; sales of household electrical appliances had also shown significant ups and downs in demand reflecting revisions to the eco-point system.

While some regions continued to point out that the level of housing investment remained low, six regions (Hokkaido, Tohoku, Kanto-Koshinetsu, Tokai, Shikoku, and Kyushu-Okinawa) reported that housing investment was picking up or showing signs of picking up in some types of housing.  In addition, the three other regions (Hokuriku, Kinki, and Chugoku) reported that housing investment had stopped declining.

By type of housing, many regions reported that construction of owned homes was above the previous year's level, and several regions (Hokkaido, Kanto-Koshinetsu, Tokai, and Kinki) reported that construction of homes for sale, notably of condominiums, had been picking up.

production had recently declined slightly in most regions, mainly due to weaker exports caused by inventory adjustments in IT-related goods and the slowdown in overseas economies, and a decline in demand following a last-minute increase ahead of the expiration of policy measures for purchasing some durable consumer goods.  Six regions (Hokkaido, Tohoku, Hokuriku, Kinki, Chugoku, and Shikoku) reported that the pace of increase in production had slowed or that it had been more or less flat; the Kanto-Koshinetsu region reported that production had recently decreased slightly and the Tokai region reported that it had been decreasing particularly in motor vehicles and parts.  Meanwhile, the Kyushu-Okinawa region reported that production had been increasing moderately.

By industry, as for motor vehicles and parts, the Kyushu-Okinawa region reported that production had begun to increase supported by the introduction of new models, but many regions reported either that production had decreased or that the pace of increase had slowed, mainly due to the decline in demand following a last-minute increase ahead of the expiration of subsidies for purchasing environmentally friendly cars.  As for electrical machinery and electronic parts, many regions reported that production had been decreasing mainly due to inventory adjustments in IT-related goods on a global basis.  In iron and steel, several regions reported either that production had declined or that the pace of increase had slowed, while low production levels had continued in paper and pulp.  Meanwhile, many regions reported an increase in general machinery.

The employment and income situation remained severe, but almost all regions reported that the degree of severity had eased.  The Tokai region reported that the improvement in the employment and income situation seemed to be pausing recently.

As for the employment situation, almost all regions reported that labor market conditions had been improving.  As for household income, all regions reported that it was reaching a bottom.

Table :
Region Public investment Business fixed
investment
Private
consumption
Housing
investment
Production Employment and income
Hokkaido Declining significantly. Increasing, but remaining at a low level. Continues to show signs of picking up, but a decline in demand is seen following a last-minute increase in some goods. Picking up. Has recently been more or less flat. The employment situation has improved moderately.
Household income is showing signs of improvement, with the year-on-year growth in nominal wages per worker increasing, although it remains severe amid continued cutbacks in personnel expenses among firms.
Tohoku Below the previous year's level. Declining, but is starting to show some signs of improvement. Has shown mixed movements due to the effects of policy measures, but has continued to show signs of a moderate pick-up as a whole. Remains sluggish, although showing signs of picking up especially in the construction of owned homes. Has been more or less flat. The employment situation is heading toward improvement.
Household income has been above the previous year's level.
Hokuriku Has been declining, because large-scale construction orders related to the Hokuriku bullet train have ended and construction orders by the central and local governments have decreased. Has stopped declining, especially in manufacturing. The decline has been coming to a halt as a whole, although there have been signs of waning effects of some policy measures. Has stopped declining, especially in the construction of owned homes. The pace of increase has started to slow. The employment situation remains severe, but labor market conditions have continued to show signs of a moderate improvement.
As for household income, scheduled cash earnings have remained at around the previous year's level. Amid this situation, special cash earnings have been picking up -- albeit at a low level -- in addition to non-scheduled cash earnings, which have continued to increase especially in manufacturing.
Kanto-Koshinetsu Declining. Has stopped declining. Has been picking up, but a decline in demand is seen following a last-minute increase ahead of the expiration of policy measures for purchasing durable consumer goods. Picking up, mainly in the construction of condominiums for sale in the Tokyo metropolitan area. Has recently decreased slightly. The employment situation continues to be severe, but labor market conditions have been improving moderately.
The decline in household income has been coming to a halt mainly due to the increase in special cash earnings.
Tokai Declining. Has begun to pick up, but the pace has slowed somewhat. Weakening as a whole, as evidenced by a continued sharp decline in automobile sales, despite some positive developments. Showing signs of picking up in some types of housing, albeit at a low level. Decreasing particularly in motor vehicles and parts. The improvement in the employment and income situation seems to be pausing recently.
Kinki Declining. Picking up moderately as the improvement in corporate profits continues. Has been picking up gradually, despite various ups and downs in demand. Has stopped declining. Had increased until the middle of 2010, but the pace of increase is recently pausing mainly due to slower growth in exports to Asia. Meanwhile, inventories have remained at a low level. In the employment situation, employment remains severe with the unemployment rate remaining at a high level, but wages have started to bottom out.
The year-on-year rate of decline in household income has been moderating.
Chugoku Declining. Picking up mainly in manufacturing. The pick-up is pausing. Has stopped declining. More or less flat. The employment situation has remained severe, but it has improved slightly as new jobs have been offered especially in manufacturing.
Non-scheduled cash earnings have increased with the pick-up in production, although household income as a whole continues to be weak, mainly reflecting firms' cutbacks in personnel expenses.
Shikoku Declining. Has begun to pick up. Continues to be relatively weak as a whole, partly due to the spreading of the effects of policy changes and the expiration of some policy measures. Showing signs of picking up in some types of housing, albeit at a low level. The pick-up seems to be pausing. The employment situation remains severe, but the degree of severity has eased slightly.
Household income has more or less stopped declining.
Kyushu-Okinawa Declining. Picking up. Has been more or less flat, despite a significant decline in demand following a last-minute increase in some durable consumer goods. Although still at a low level, has begun to pick up, especially in the construction of owned homes. Has been increasing moderately, although a decline in demand is seen following a last-minute increase in some durable consumer goods. The employment and household income situation has remained severe as a whole, but signs of a slight improvement have been seen.

Appendix: Prefectures Included in Each Region

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

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