Regional Economic Report (Summary) (October 2006)*
- This report is based on data and other information gathered for the Bank of Japan's branch managers' meeting held today. The report summarizes the reports from all regional research divisions, mainly at the Bank's branches in Japan, and does not necessarily reflect a consensus of the Bank. The English translation is based on the Japanese original released on October 19, 2006.
October 19, 2006
Bank of Japan
According to reports from each of the nine regions in Japan, the economy as a whole expanded moderately as all regions were on the expansion or recovery trend, although there were regional differences.
Specifically, the corporate sector became more buoyant as seen in the fact that business fixed investment was on an increasing trend in all regions and exports increased in many regions. Private consumption recovered gradually, although there were regional differences, as the strength in the corporate sector gradually benefited the household sector. The increase in production became more evident. The degree and momentum of economic recovery, however, still varied: Kanto-Koshinetsu, Tokai, and Kinki described the economic activity as expanding, while the other regions described it as being on the recovery trend.
Compared with the assessment in July 2006, at the time of the last branch managers' meeting, Kanto-Koshinetsu and Hokkaido revised their assessments slightly upward, mainly due to the increase in exports and production for the former and positive momentum of private consumption for the latter. The other seven regions maintained their assessments as either expanding or on the recovery trend.
| Region | Assessment in October 2006 | Revision of assessment from the previous meeting |
Assessment in July 2006 |
|---|---|---|---|
| Hokkaido | The economy is picking up gradually. | Slightly upward. | The pickup in the economy slows. |
| Tohoku | The economy continues to recover gradually. | Unchanged. | The economy is recovering gradually. |
| Hokuriku | The economy is recovering steadily. | Unchanged. | The economy is recovering steadily. |
| Kanto-Koshinetsu | The economy is expanding gradually. | Slightly upward. | The economy continues to recover steadily. |
| Tokai | The economy is expanding. | Unchanged. | The economy is expanding. |
| Kinki | The economy continues to expand. | Unchanged. | The economy continues to expand. |
| Chugoku | The economy continues to recover as a whole. | Unchanged. | The economy continues to recover as a whole. |
| Shikoku | The economy continues to pick up gradually. | Unchanged. | The economy continues to show signs of gradual picking up. |
| Kyushu-Okinawa | The economy continues to recover. | Unchanged. | The economy continues to recover. |
Private consumption was gradually "increasing" or "recovering" in the Kanto-Koshinetsu, Tokai, and Kinki regions. Many other regions reported it was either "steady" or "picking up." Hokkaido upgraded its assessment to "flat" from "recovery has weakened."
Looking at major indicators of consumption, sales at large retail stores started to show a recovery mainly in apparel, after being sluggish due to unfavorable weather until July. Sales of household electrical appliances continued to be "increasing" or "solid," particularly in digital household appliances and high-value-added white goods. In contrast, sales of passenger cars remained weak. With regard to tourism, several regions reported that the number of tourists had exceeded the level of the previous year and travel expenses remained solid supported by overseas travel.
Compared with the previous assessment of private consumption, Hokkaido revised its assessment slightly upward.
Business fixed investment continued to be on an increasing trend in all regions, reflecting favorable domestic and external demand and high corporate profits. Chugoku reported that not only large firms but also small and medium-sized ones were actively investing to expand their production capacity.
Compared with the previous assessment of business fixed investment, Chugoku revised its assessment slightly upward.
Most regions reported that production was increasing supported by favorable domestic and external demand. Meanwhile, Hokkaido and Shikoku reported that production was "picking up gradually," or "recovering gradually," respectively.
By industry, processing industries continued to increase production due to high demand particularly in electronic parts and devices used for digital household appliances and mobile phones, as well as in electrical machinery and general machinery. Production of transportation equipment such as automobile-related goods also increased, mainly for exports. Meanwhile, trends in the materials industries still varied: iron and steel maintained a high level of production and, in Hokuriku, textiles almost stopped declining, while cement, ceramics and glass kept low levels of production in most regions due to decreasing public investment.
Compared with the previous assessment of production, Kanto-Koshinetsu revised its assessment slightly upward.
The employment and income situation continued to improve in most regions, as evident in the increase in new job offers reflecting the rise in the production level. However, there were still substantial regional differences in the assessments of labor market conditions, ranging from "the ratio of job offers to applicants is at a high level" in Tokai to an assessment that "the employment situation remains flat" in Hokkaido. Many regions, despite the differences in degree, reported that household income was either increasing or improving, supported by improvements in labor market conditions and high corporate profits. In contrast, Hokkaido reported that household income was "somewhat weak," and Tohoku reported that it was "sluggish although the rate of decline compared to the year before is slowing."
On the employment and income situation, Hokkaido revised its assessment slightly downward.
| Region | Private consumption | Business fixed investment | Production | Employment and income |
|---|---|---|---|---|
| Hokkaido | Flat. | Steady. | Picking up gradually. | The employment situation remains flat. Household income is somewhat weak. |
| Tohoku | Steady. | Increasing. | Increasing. | The employment situation continues to be on a recovery trend. Household income is sluggish although the rate of decline compared to the year before is slowing. |
| Hokuriku | Picking up. | Expected to exceed the high level of 2005, mainly in manufacturing. | Increasing. | The employment situation continues to improve. Household income is increasing gradually. |
| Kanto-Koshinetsu | On a gradual increasing trend. | Increasing steadily. | Increasing. | The employment situation continues to improve. Household income continues to increase gradually. |
| Tokai | Recovering gradually. | Continues to increase steadily. | Increasing. | The ratio of job offers to applicants is at a high level, and the number of full-time employees is increasing. Household income is improving. |
| Kinki | Increasing gradually as a whole. | Increasing substantially. | Increasing. | The employment situation is improving. Household income is increasing gradually. |
| Chugoku | Picking up. | Increasing. | On an increasing trend. | The ratio of job offers to applicants continues to improve. Household income is increasing gradually. |
| Shikoku | Steady as a whole. | Recovering mainly in manufacturing. | Recovering gradually. | The employment situation continues to improve gradually. Household income is gradually recovering on the whole. |
| Kyushu-Okinawa | Steady. | At a high level. | Increasing. | The employment situation continues to be on a gradual improving trend. Household income continues to exceed the level of the year before. |
Appendix: Prefectures Included in Each Region
| Region | Prefectures |
|---|---|
| (a) Hokkaido | Hokkaido |
| (b) Tohoku | Miyagi, Aomori, Akita, Iwate, Yamagata, and Fukushima |
| (c) Hokuriku | Ishikawa, Toyama, and Fukui |
| (d) Kanto-Koshinetsu | Tokyo, Chiba, Saitama, Ibaraki, Tochigi, Gunma, Kanagawa, Niigata, Yamanashi, and Nagano |
| (e) Tokai | Aichi, Shizuoka, Gifu, and Mie |
| (f) Kinki | Osaka, Kyoto, Shiga, Nara, Wakayama, and Hyogo |
| (g) Chugoku | Hiroshima, Okayama, Tottori, Shimane, and Yamaguchi |
| (h) Shikoku | Kagawa, Tokushima, Ehime, and Kochi |
| (i) Kyushu-Okinawa | Fukuoka, Saga, Oita, Nagasaki, Kumamoto, Miyazaki, Kagoshima, and Okinawa |
For further information, please contact:
Regional Economy, Research and Statistics Department
Tel: +81-3-3277-1357