Regional Economic Report (Summary) (October 2008)^*

October 20, 2008
Bank of Japan

According to reports from each of the nine regions in Japan, economic growth had been sluggish in general, mainly due to the effects of earlier increases in energy and materials prices and weaker growth in exports, although there were some regional differences. 

The pace of increase in exports slowed.  Corporate profits continued to decrease mainly due to the deterioration in the terms of trade, and business sentiment became even more cautious.  In this situation, business fixed investment remained more or less flat in some regions, but was generally decreasing recently.  Private consumption was relatively weak, mainly due to sluggish growth in household income and the increase in prices of energy and food.  Meanwhile, housing investment was flat.  Under these circumstances, production was relatively weak.

Assessments showed that regional differences remained: Tokai reported that its economy had continued to be at a high level although it was on a downtrend, while Hokkaido reported that its economy was in a somewhat severe situation.

Compared with the assessment in July 2008, at the time of the last branch managers' meeting, all nine regions revised their assessments downward, mainly reflecting the fact that the weakness in private consumption and production had become widespread (Tohoku, Hokuriku, Tokai, and Chugoku revised their assessments downward, while the remaining five regions revised their assessments slightly downward). 

Private consumption was "in a somewhat severe situation" or "weak" in the Hokkaido and Chugoku regions, respectively.  Other regions reported that it was "relatively weak" or "weakening."

At large retail stores, sales of apparel, general merchandise, and accessories were relatively weak, while sales of food were firm.  Sales of household electrical appliances were solid, particularly for digital appliances, such as flat-panel televisions.  Sales of passenger cars were weak, mainly due to high gasoline prices.  Travel expenses were also weak, mainly in overseas travel. 

Compared with the previous assessment of private consumption, Hokuriku and Tokai maintained their previous assessments, whereas Tohoku and Chugoku revised their assessments downward, and Hokkaido, Kanto-Koshinetsu, Kinki, Shikoku, and Kyushu-Okinawa revised their assessments slightly downward.  

As for business fixed investment, some regions reported that "the pace of increase has become slower" or that it was "flat at a high level," while it was notable that several regions reported that it was "declining" or "slightly weak," reflecting the decrease in corporate profits caused mainly by the deterioration in the terms of trade.

Compared with the previous assessment of business fixed investment, Hokkaido, Tohoku, Chugoku, and Shikoku maintained their previous assessments, whereas Hokuriku revised its assessment downward, and Kanto-Koshinetsu, Tokai, Kinki, and Kyushu-Okinawa revised their assessments slightly downward.

Production was reported as being flat or maintaining a relatively high level in the Hokkaido, Chugoku, and Shikoku regions, whereas Tokai reported that it was "declining," and some other regions reported that it was "relatively weak."   

By industry, the following developments were observed, although there were regional differences.  In processing industries, production of electronic parts and devices, transportation equipment, and general machinery was relatively weak.  In materials industries, production of chemicals and textiles was also relatively weak.

Compared with the previous assessment of production, Hokkaido maintained its previous assessment, whereas Tohoku and Hokuriku revised their assessments downward, and Kanto-Koshinetsu, Tokai, Kinki, Chugoku, Shikoku, and Kyushu-Okinawa revised their assessments slightly downward. 

Employment was relatively weak in all regions.  Hokkaido, Kanto-Koshinetsu, Chugoku, Shikoku, and Kyushu-Okinawa reported that it had been "relatively weak" or weakening, or that the improvement had come to a pause.  Tohoku, Hokuriku, Tokai, and Kinki also reported that the ratio of job offers to applicants continued to decline or growth in the number of employees had been relatively weak. 

For household income, regional differences were observed.  Kanto-Koshinetsu, Tokai, Kinki, and Chugoku reported that its growth was relatively weak or flat.  Meanwhile, Hokuriku, Shikoku, and Kyushu-Okinawa reported that it had been slightly weak, and Hokkaido and Tohoku reported that it continued to be in a severe situation or had been declining. 

Compared with the previous assessment of employment, Tohoku maintained its previous assessment, whereas the other eight regions revised their assessments slightly downward.  As for household income, Hokuriku, Kanto-Koshinetsu, Tokai, Shikoku, and Kyushu-Okinawa revised their assessments slightly downward. 

Appendix: Prefectures Included in Each Region