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Regional Economic Report (Summary) (April 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.

April 11, 2011
Bank of Japan

Cautious views about the economy have become widespread in many regions, mainly reflecting setbacks in production following the Great East Japan Earthquake (hereafter the earthquake).

By region, the Tohoku region reported significant damage to the economy from the earthquake, with impairment of the social infrastructure as well as production and business facilities; the Kanto-Koshinetsu and Tokai regions reported that they were in a severe condition, mainly due to a sharp decline in production following the earthquake.Other regions also reported cautious views, noting that the effects of the earthquake were starting to become noticeable mainly on the production side or that the economy had begun to show signs of stagnation, due mainly to supply-chain disruptions as well as cautious consumer sentiment.

Table : Regional Economic Report
Region Assessment in January 2011 Difference
between
assessments1
Assessment in April 2011
Hokkaido The economy seems to have paused recently, although it has continued picking up. lower right The economy has recently been under downward pressure due to the effects of the earthquake.
Tohoku The economy is picking up as a whole, although the recovery seems to be pausing particularly in manufacturing. lower right The damage caused by the earthquake has been widespread, particularly in the coastal area along the Pacific Ocean.  As a result, the economy -- which had been picking up until recently -- has been damaged significantly, with impairment of the social infrastructure as well as production and business facilities.
Hokuriku The economy is recovering moderately, but improvements have slowed. lower right The economy has recently been showing signs of stagnation, and business and consumer sentiment has also turned cautious, due to the widespread damage from the earthquake.
Kanto-Koshinetsu The economy is recovering moderately, but the recovery seems to be pausing.  Differences among regions and industries also remain. lower right The economy is in a severe condition due to a sharp decline in production caused by the earthquake.
Tokai The economy has paused. lower right The economy seems to be worsening recently, although it had been picking up gradually.
Kinki The economy has recently paused, although it has been on a moderate recovery trend. unchanged The effects of the earthquake are starting to become noticeable mainly on the production side, although the economy had been recovering moderately despite a pause in autumn 2010.
Chugoku The recovery in the economy seems to be pausing. lower right The economy is beginning to show signs of stagnation mainly due to constraints on production and cautious consumer sentiment that have become widespread reflecting the effects of the earthquake.
Shikoku The pick-up in the economy seems to be pausing. upper right The economy has been picking up.  However, production as well as business and consumer sentiment are likely to come under downward pressure in the short term due to the effects of the earthquake.
Kyushu-Okinawa 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. lower right The effects of constraints on the supply side due to the earthquake have recently been apparent, although the economy had been recovering moderately.
  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.

Seven regions (Tohoku, Hokuriku, Tokai, Kinki, Chugoku, Shikoku, and Kyushu-Okinawa) reported that Public investment had been declining.  However, the Hokkaido region reported that the year-on-year rate of decline in public investment had been moderating.  The Kanto-Koshinetsu region also reported that the pace of decline had begun to slow, as there were signs of restoration demand in some parts of the disaster-stricken areas.

As for business fixed investment, six regions (Hokkaido, Hokuriku, Tokai, Kinki, Shikoku, and Kyushu-Okinawa) reported that it was picking up or had begun to pick up.  The three other regions (Tohoku, Kanto-Koshinetsu, and Chugoku) reported that it was weakening as some firms seemed to be revising their investment plans, or that current plans were expected to be revised substantially in the near future.

Seven regions (Hokkaido, Tohoku, Hokuriku, Kanto-Koshinetsu, Tokai, Chugoku, and Kyushu-Okinawa) reported that private consumption had been weakening against the backdrop of cautious consumer sentiment following the earthquake.While two regions (Kinki and Shikoku) reported that private consumption had been picking up, Shikoku also noted that there was widespread concern over the impact of the earthquake on purchasing goods and consumer sentiment in the near future.

By goods, as for sales at large retail stores, many regions reported that there were signs of restraining spending on nonessential and non-urgent goods on the back of cautious consumer sentiment, although there were increases in sales of emergency-related goods and goods related to disaster prevention.As for automobile sales, two regions (Kinki and Shikoku) reported signs of a pick-up, while five regions (Hokuriku, Kanto-Koshinetsu, Tokai, Chugoku, and Kyushu-Okinawa) reported a decline due to the effects of the earthquake and the reverse following the last-minute increase in demand upon the expiration of policy measures.Many regions reported a decline in sales of household electrical appliances due to the effects of the earthquake and a revision to policy measures, while two regions (Tokai and Shikoku) reported signs of picking up.As for travel-related demand, the Tohoku region reported serious effects on tourism demand due to the disaster and the disrupted transportation system; other regions also reported a decline in the number of foreign tourists as well as widespread cancellations of domestic travel.

As for housing investment, six regions (Hokkaido, Tohoku, Tokai, Kinki, Shikoku, and Kyushu-Okinawa) reported that housing investment was picking up or showing signs of picking up in some types of housing.The three other regions (Hokuriku, Kanto-Koshinetsu, and Chugoku), however, reported that some delays in construction schedules had been seen, mainly due to constraints on the supply of housing materials since the earthquake.

As for production, all regions pointed to the effects of the earthquake.Seven regions (Hokkaido, Tohoku, Hokuriku, Kanto-Koshinetsu, Tokai, Chugoku, and Kyushu-Okinawa) reported that production had been decreasing significantly or had turned down, mainly due to damage to production facilities, supply-chain disruptions, and constraints on the use of electricity caused by the earthquake.The two other regions (Kinki and Shikoku) also noted that the effects of the earthquake were starting to become noticeable or that production had tended to pick up, but a decline in production was expected in the short term due to the effects of the earthquake.

By industry, as for motor vehicles and parts, most regions reported a substantial reduction in capacity utilization, mainly due to difficulties in procuring materials and parts as a result of supply-chain disruptions.The Tokai and Shikoku regions reported that production such as in electrical machinery and electronic parts as well as general machinery had been increasing, particularly for those to overseas, whereas several regions reported that some firms had shown signs of production adjustment due to difficulties in procuring materials and parts.Meanwhile, two regions (Hokkaido and Kyushu-Okinawa) reported that firms had raised their production levels for foodstuffs, in response to the demand from disaster-stricken areas.

The employment and income situation had remained severe for many regions since the previous report, but some regions reported that the degree of severity had eased.Three regions (Kanto-Koshinetsu, Tokai, and Chugoku) reported that the effects of production declines on the future employment and income situation were a matter of concern.

Table :
Region Public investment Business fixed
investment
Private
consumption
Housing
investment
Production Employment and income
Hokkaido The year-on-year rate of decline is moderating. Picking up. Showing signs of restraining spending on nonessential and non-urgent goods, particularly in non-durable consumer goods. Picking up at a slower pace. Has recently been declining. The employment situation has improved moderately. Household income has continued to improve, with both the number of regular employees and year-on-year growth in nominal wages per worker exceeding the previous year's level.
Tohoku Below the previous year's level. Exceeded the previous year's level for the first time in four years.  However, current plans are expected to be revised substantially in the near future due to the effects of the earthquake. Although it had continued to show signs of a moderate pick-up until recently, private consumption has been seriously affected by the earthquake due to the fact that means of transportation of individuals were greatly restrained mainly reflecting gasoline shortages, in addition to the significant damage caused to business facilities and distribution networks. Remains sluggish, although showing signs of picking up especially in the construction of owned homes. Had been increasing moderately, but has recently declined sharply due to the effects of the earthquake. The employment situation is heading toward improvement. Household income was below the previous year's level.
Hokuriku Has been declining, because large-scale construction orders related to the Hokuriku bullet train have ended. Picking up moderately, especially in manufacturing. Weakening as a whole, with the exception of some daily necessities, due mainly to cautious consumer sentiment after the earthquake. Has stopped declining, especially in the construction of owned homes, but some delays in construction schedules have also been seen due to difficulties in procuring construction materials. Had been increasing, but production adjustment has been observed in some industries faced with difficulties in procuring materials and parts after the earthquake. The employment situation has become less severe as the ratio of job offers to applicants continues to increase moderately.
As for household income, scheduled cash earnings have remained at around the previous year's level, whereas special cash earnings have been picking up, albeit at a low level.
Kanto-Koshinetsu The pace of decline has begun to slow, as there are signs of restoration demand in some parts of the disaster-stricken areas such as Ibaraki, Tochigi, and Chiba prefectures. Seems to be weakening after the earthquake, as some firms seem to be revising their investment plans. Seems to be declining significantly due to cautious consumer sentiment and constraints on the use of electricity after the earthquake. Delays have been seen in some construction starts of new homes, mainly due to constraints on the supply of housing materials since the earthquake. Has been decreasing significantly since the earthquake, mainly due to damage to production facilities, supply-chain disruptions, and constraints on the use of electricity. The employment and household income situation continues to be severe.  Concerns have been voiced on the impact on future income, given that some nonregular employees have been forced to stay at home, mainly due to a decrease in production activity caused by the earthquake.
Tokai Declining. Has begun to pick up moderately. Seems to be weakening recently, reflecting the effects of the earthquake. Showing signs of picking up in some types of housing, albeit at a low level. Recently seems to be decreasing substantially, particularly in motor vehicles and parts, due to effects of the earthquake. The effects of production declines on the future employment and income situation are a matter of concern.
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 started to pick up gradually. Had been starting to turn upward again, mainly due to a pick-up in exports to Asia, but the effects of the earthquake are starting to become noticeable.  Meanwhile, inventories have remained at a low level. Employment still remains severe, but labor market conditions have been improving gradually and wages have also stopped declining.
The year-on-year rate of decline in household income has been moderating.
Chugoku Declining. Had continued to pick up until recently, but some firms have started to show signs of postponing or revising their investment plans. The effects of a pullback in consumer sentiment are apparent. Has recently stopped declining, but some postponements or revisions of investment plans are beginning to be seen. Production is showing signs of slowing, mainly due to difficulties in procuring materials and parts caused by the earthquake.  There is concern that production, not only in the automobile industry but also in a wide range of industries, may be affected by difficulties in procuring materials and parts in the near future. The employment situation has remained severe, but it has improved slightly as new jobs have been offered, especially in manufacturing.
Although household income as a whole continues to be weak, mainly reflecting firms' cutbacks in personnel expenses, non-scheduled cash earnings have increased.  However, the effects of constraints on production activity in the future are a matter of concern.
Shikoku Declining. Has begun to pick up. Has been at a low level as a whole, although there are some signs of picking up.  Sales of emergency-related goods and goods related to disaster prevention are increasing, but there is widespread concern over the impact of the earthquake on purchasing goods and consumer sentiment in the near future. Showing signs of picking up in some types of housing, albeit at a low level. Has tended to pick up, but a decline in production is expected in the short term due to the effects of the earthquake. 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. Weakening somewhat as a whole, as consumers have refrained from traveling following the earthquake. Although still at a low level, has been picking up moderately. Has turned down as a whole since the earthquake, with capacity utilization of some firms declining due to difficulties in procuring materials and parts, whereas firms producing foodstuffs and some chemical manufacturers have raised their capacity utilization. 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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