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Regional Economic Report (Summary) (July 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 meeting of general managers of the Bank's branches held today.The English translation is based on the Japanese original.

July 4, 2011
Bank of Japan

Compared with the last assessment in April 2011, seven regions -- which had made a cautious assessment in the aftermath of the Great East Japan Earthquake (hereafter the earthquake) -- reported that there were signs of a pick-up in their economies against the background of an easing of supply-side constraints and an improvement in household and business sentiment.Meanwhile, the Kinki and Shikoku regions reported that their economies had continued to pick up as a trend, which was more or less unchanged from the assessment in the previous report.

Differences in the pace of the pick-up, however, had been observed among regions, amid continued downward pressure caused by the earthquake disaster: the Tohoku and Kanto-Koshinetsu regions reported that the situation continued to be severe in the areas that had suffered significant damage from the disaster.

Table : Regional Economic Report
Region Assessment in April 2011 Changes
from the
previous
assessment1
Assessment in July 2011
Hokkaido The economy has recently been under downward pressure due to the effects of the earthquake. upper right The economy remains under downward pressure due to the disaster, but there have been some signs of a pick-up.
Tohoku 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. upper right Although the economy deteriorated substantially due to the disaster, moves toward the normalization of economic activity are proceeding steadily, albeit with differences among areas, reflecting progress in the restoration of social infrastructure as well as production and business facilities.
Hokuriku 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. upper right The economy has begun to pick up as a whole, although some signs of severity are observed.
Kanto-Koshinetsu The economy is in a severe condition due to a sharp decline in production caused by the earthquake. upper right Although the economy continues to be in a severe condition, there have been signs of a pick-up, albeit with differences among areas and industries, as supply-side constraints ease and household and business sentiment improves.
Tokai The economy seems to be worsening recently, although it had been picking up gradually. upper right The economy seems to be picking up gradually, although it remains in a severe condition.
Kinki 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. unchanged The economy is on a moderate recovery trend, but the effects of the disaster have been observed mainly on the production side.
Chugoku 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. upper right The economy is beginning to pick up, as downward pressure on production caused by the disaster has begun to ease.
Shikoku 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. unchanged The economy has been picking up.  Meanwhile, downward pressure observed after the earthquake has been easing.
Kyushu-Okinawa The effects of constraints on the supply side due to the earthquake have recently been apparent, although the economy had been recovering moderately. upper right The economy has begun to pick up compared with the situation immediately after the earthquake, as downward pressure caused by the effects of the disaster has begun to ease.
  1. With regard to the changes from the previous assessment, arrows pointing to the upper right or 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.

As for public investment, the Tohoku region reported that it was above the previous year's level, and the Kanto-Koshinetsu region reported that the pace of decline had been slowing.On the other hand, the seven other regions (Hokkaido, Hokuriku, Tokai, Kinki, Chugoku, Shikoku, and Kyushu-Okinawa) reported that public investment had been declining.

As for business fixed investment, seven regions (Hokkaido, Tohoku, Hokuriku, Tokai, Kinki, Chugoku, and Shikoku) reported that it was picking up, mainly reflecting an increase in demand for restoration after the earthquake and signs of a further increase in investment in new products.The Kanto-Koshinetsu region also reported that, although investment continued to be relatively weak, moves to restore damaged facilities -- mainly in disaster-stricken areas -- had been observed, while some firms were starting to implement their initial investment plans, which had been suspended immediately after the earthquake.Meanwhile, the Kyushu-Okinawa region reported that investment had been relatively weak, due mainly to a reversal after large-scale investment in the previous year.

All regions reported that private consumption had shown some signs of picking up against the backdrop of improving consumer sentiment in addition to the easing of supply-side constraints.

By goods, as for sales at large retail stores, all regions reported signs of a pick-up or bottoming out mainly due to an improvement in consumer sentiment.The Kyushu-Okinawa region reported that sales of household electrical appliances were weak, whereas other regions reported an increase in sales of energy-efficient electrical appliances reflecting growing awareness of the need for energy saving.As for automobile sales, although most regions reported a significant decline, the Hokkaido, Tohoku, Kanto-Koshinetsu, Tokai, Shikoku, and Kyushu-Okinawa regions reported a slower pace of decline against the backdrop of the easing of supply-side constraints.As for travel-related demand, although the Kyushu-Okinawa region reported a pick-up in the number of domestic tourists, many regions, including Hokkaido, Tohoku, Hokuriku, and Kanto-Koshinetsu, reported a decline in the number of both domestic and foreign tourists.

As for housing investment, four regions (Hokkaido, Tokai, Shikoku, and Kyushu-Okinawa) reported that it was picking up or had shown signs of a pick-up in some types of housing.The Hokuriku and Chugoku regions also reported that housing investment had stopped declining.On the other hand, the Tohoku region, where damage caused by the disaster had been significant, reported that housing investment had been sluggish, and the Kanto-Koshinetsu region also reported that it had generally continued to be weak.The Kinki region reported that housing investment had been relatively weak, due mainly to the effects of the disaster.

Most regions reported that production was increasing or was picking up as supply-side constraints had been easing, despite a significant decline after the earthquake.Meanwhile, the Kinki region reported that, although production had been on an uptrend, the effects of the disaster had been observed.

The Tohoku region reported that production had been increasing steadily, although many firms in the coastal area along the Pacific Ocean were still forced to shut down or cut back production, mainly due to significant damage to their production facilities.

By industry, most regions pointed to the easing of supply-side constraints, and therefore, they reported that many industries, including motor vehicles and parts, electrical machinery, and general machinery, had shown signs of raising their production levels.

Many regions reported that the employment and income situation had remained severe.

Table :
Region Public investment Business fixed
investment
Private
consumption
Housing
investment
Production Employment and income
Hokkaido On a declining trend Picking up as a whole Although automobile sales have been well below the previous year's level, some signs of a pick-up have been observed, such as in sales of household electrical appliances and high-end products, as consumer sentiment has been improving compared with that immediately after the earthquake Picking up moderately Has stopped declining The employment situation has been picking up moderately. 
Household income has continued to improve, with both the number of regular employees and year-on-year growth in nominal wages per worker above the previous year's level.
Tohoku Above the previous year's level Projected to be above the previous year's level Despite the significant decline caused by the disaster, signs of a pick-up have recently been spread Has been sluggish Has been increasing steadily, although it still remains below the level prior to the earthquake The employment situation is worsening due to the effects of the disaster, but the pace of decline is moderating due partly to the increase in the number of new jobs offers
Hokuriku Has been declining, because large-scale construction orders related to the Hokuriku bullet train have ended Picking up moderately, especially in manufacturing Although the environment surrounding the travel-related sector remains severe, private consumption has begun to recover to pre-earthquake levels as a whole with the weakening of voluntary restraint in consumer spending Has stopped declining Has been recovering as a whole, as supply-side constraints that had reflected difficulties in procuring materials and parts as well as production cutbacks by car manufacturers have eased, while emerging economies continue strong economic growth The employment situation has become less severe as the ratio of job offers to applicants continues to improve as a trend.
Household income has been above the previous year's level.
Kanto-Koshinetsu The pace of decline has been slowing Continues to be relatively weak, but moves to restore damaged facilities -- mainly in disaster-stricken areas -- have been observed, while some firms were starting to implement their initial investment plans, which had been suspended immediately after the earthquake Seems to be picking up mainly in durable goods and some services consumption with the gradual improvement in consumer sentiment.  However, travel-related services such as hotels and tourist attractions have been declining sharply, due to the ongoing slump in the number of both domestic and foreign tourists. Has generally continued to be weak, mainly because delays have been observed in some construction starts of new homes that were mostly caused by supply-side constraints from the effects of the disaster Many industries have raised their production levels, as supply-side constraints ease The employment and household income situation continues to be severe
Tokai Has been declining Picking up, especially in manufacturing Has begun to pick up Showing signs of picking up in some types of housing, albeit at a low level Has been decreasing substantially, but seems to be picking up recently as supply-side constraints ease gradually The employment and household income situation has been relatively weak, mainly reflecting declines in production since the earthquake
Kinki Declining Picking up moderately as the improvement in corporate profits continues Picking up moderately as a whole, due in part to increased floor space at department stores in addition to steady sales of household electrical appliances, although somewhat weak movements have been observed, such as in automobile sales, affected by the disaster Has been relatively weak, due mainly to the effects of the disaster Had been on an uptrend, mainly due to a pick-up in exports to Asia, but the effects of the disaster have been observed.  Meanwhile, inventories have remained at a low level The employment situation still remains severe, but labor market conditions have been improving gradually and wages have also stopped declining.  In light of this situation, the year-on-year rate of decline in household income has been moderating.
Chugoku Declining Has been picking up, especially in manufacturing, although some firms had shown signs of postponing or revising their investment plans Although automobile sales have been declining sharply due mainly to a supply shortage of new passenger cars, it has been showing signs of a pick-up, with the gradual improvement in consumer sentiment Has recently stopped declining, although some firms have shown signs of postponing their investment plans Has begun to recover, as difficulties in procuring materials and parts caused by the disaster are beginning to be addressed The employment situation remains severe, and signs of a pick-up in some industries that had been observed have waned since the earthquake. 
Household income continues to be weak as a whole, mainly reflecting firms' cutbacks in personnel expenses.
Shikoku Has been declining Picking up Has been weak since the earthquake mainly in automobile sales, although there are some signs of a pick-up Has been showing signs of picking up in some types of housing, albeit at a low level Has tended to pick up.  Meanwhile, downward pressure observed since the earthquake has been easing. The employment situation has been improving. 
Household income has more or less stopped declining.
Kyushu-Okinawa Declining Has been relatively weak Has been weak in some areas, but it has begun to pick up from comparable levels immediately after the earthquake as supply-side constraints have been weakening and consumers have become less cautious Picking up moderately, as constraints on the supply of materials are beginning to ease Increasing compared with the level observed immediately after the earthquake, as the situation for procuring materials and parts has begun to normalize, and industries have raised their capacity utilization, mainly among car manufacturers The employment and household income situation has remained severe as a whole, but the labor market is improving somewhat

Appendix: Prefectures Included in Each Region

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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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