Regional Economic Report (Summary) (October 2009)^*

• 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.

October 19, 2009
Bank of Japan

According to reports from each of the nine regions in Japan, signs of picking up had appeared throughout the economy, although regional differences remained.

Public investment increased. Exports and production picked up mainly due to progress in inventory adjustments both at home and abroad. On the other hand, business fixed investment declined substantially, mainly reflecting weak corporate profits. Private consumption continued to be weak amid the severe employment and income situation, despite the appearance of some policy effects. Housing investment also decreased.

Compared with the assessment in July 2009, all regions revised their assessments, although Hokkaido, Tohoku, Hokuriku, Kinki, and Shikoku continued to report that their economies were in a severe situation.

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.

Private consumption continued to be weak in all regions amid the severe employment and income situation, despite the appearance of some policy effects.

While some policy effects had appeared in sales of household electrical appliances (such as flat-panel televisions) and passenger cars (such as hybrid cars), sales at large retail stores continued to be weak, mainly in apparel and accessories. Travel and leisure expenses remained generally weak, although some positive effects of the reduction of expressway tolls for automobiles with electronic toll collection devices had appeared.

Compared with the previous assessment of private consumption, most regions assessed that there were no significant changes from their previous assessments, although there were some signs of improvement.

Business fixed investment declined substantially, mainly reflecting weak corporate profits.

By industry, in manufacturing, business fixed investment declined mainly in sub-industries such as electrical machinery, transportation equipment, and chemicals. As for nonmanufacturing, investment declined mainly in sub-industries such as information and communications as well as wholesaling and retailing.

Compared with the previous assessment of business fixed investment, all regions maintained their previous assessments.

Production picked up.

By industry, production in industries such as electronic parts and devices (such as parts for cellular phones and LCD devices), transportation equipment (motor vehicles and motor vehicle parts), chemicals (such as ethylene and polyvinyl chloride), and iron and steel picked up, mainly due to the increase in exports; production in general machinery leveled out. On the other hand, production cuts continued in industries such as paper and pulp and cement, ceramics and glass.

At the time of the previous assessment, Hokkaido, Tohoku, Kinki, and Shikoku assessed that production was on a decreasing trend, but the assessments in October showed that production was on an increasing trend in all regions, although there were some regional differences in the pace of increase.

The employment and income situation continued to deteriorate. Some regions reported that the ratio of job offers to applicants had stopped declining, but the number of employees continued to decrease on the whole. Household income continued to decline mainly due to the decrease in employees' cash earnings such as non-scheduled cash earnings and special cash earnings.

Compared with the previous assessment of employment, many regions maintained their previous assessments, but Kinki reported that the employment situation had deteriorated. On the other hand, Tohoku and Tokai reported that the pace of deterioration had slowed, as the labor market conditions had begun to stop worsening. As for household income, almost all regions maintained their previous assessments with the exception of Kinki, which reported an acceleration in the pace of decline.

Table : Regional Economic Report (Summary) (October 2009)

Region	Private consumption	Business fixed investment	Production	Employment and income
Hokkaido	Showing signs of picking up, mainly due to policy effects.	Declining substantially.	Showing some signs of picking up.	The employment situation continues to be severe. Household income continues to be in a severe situation, as firms have continued to cut back personnel expenses in response to the deterioration in corporate profits, although the pace of decline in their employees' overtime working hours has moderated.
Tohoku	Continues to be weak as a whole, although some policy effects have appeared.	Declining substantially.	Has picked up, mainly due to progress in inventory adjustments both at home and abroad and to the increase in overseas demand.	There have been some signs that the employment situation has stopped worsening, although it continues to be severe. Household income continues to decline.
Hokuriku	Weak as a whole, although some signs of picking up have continued to appear due to policy effects.	Declining substantially.	Has picked up steadily as a whole, mainly due to the increase in exports to countries such as China and South Korea.	The number of regular employees continues to be below the previous year's level, and the ratio of job offers to applicants remains at a low level due to the increase in the number of job seekers and the decrease in the number of job offers. Household income has remained below the previous year's level, mainly due to the decline in the number of regular employees, non-scheduled cash earnings, and special cash earnings.
Kanto-Koshinetsu	Continues to be weak, as the employment and income situation has become increasingly severe, as seen in the substantial decrease in summer bonuses.	Declining substantially, reflecting weak corporate profits.	Increasing due to progress in inventory adjustments both at home and abroad as well as policy effects.	The employment situation is deteriorating. Household income has declined substantially, mainly reflecting the decrease in corporate profits.
Tokai	Continues to be generally weak, although there have been some signs of picking up.	Remaining at a low level.	Increasing.	Labor market conditions have begun to stop deteriorating, although the employment and income situation as a whole remains severe.
Kinki	Continues to be generally weak amid the acceleration in the pace of decline in household income due to the substantial decrease in summer bonuses, although policy effects on durable consumer goods have appeared.	Declining, as corporate profits remain severe.	Has picked up, although remaining at a low level. Meanwhile, inventories have continued to decrease.	The number of employees has continued to decline, while the ratio of job offers to applicants remains at a low level. The pace of decline in household income has accelerated.
Chugoku	Continues to be relatively weak.	Declining substantially.	Has picked up.	The employment situation continues to be severe, but the decline in the ratio of job offers to applicants has come to a pause. Household income continues to be relatively weak, mainly reflecting firms' cutback in personnel expenses in response to the deterioration in corporate profits.
Shikoku	Relatively weak as a whole, although some effects of the additional economic measures have appeared.	Declining substantially.	Has picked up, although production levels are still low on the whole.	The employment situation continues to deteriorate. Household income has declined substantially.
Kyushu-Okinawa	Continues to be weak as a whole, although there have been some signs of picking up mainly due to policy effects.	Declining.	Increasing.	Severity in the employment and household income situation is increasing further.

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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