Regional Economic Report (Summary) (January 2015)^*

January 15, 2015
Bank of Japan

Compared with the last assessment in October 2014, the Hokkaido region revised its assessment downward by noting that some weakness had been observed in some aspects, including the decline in public investment, but the other eight regions reported that their assessments regarding the pace of economic improvement had remained unchanged.

All regions, including the Hokkaido region, reported that the economy had been recovering or recovering moderately as a trend, against the background of firm domestic demand, a pick-up in overseas demand, and the ongoing steady improvement in the employment and income situation. Meanwhile, with regard to private consumption, many regions noted that the effects of the subsequent decline in demand following the front-loaded increase prior to the consumption tax hike had been waning on the whole. As for production, there were reports that it had shown signs of bottoming out, although some weakness had still been observed in some aspects.

As for public investment, the Tohoku and Kinki regions reported that it was increasing, and four regions (Kanto-Koshinetsu, Chugoku, Shikoku, and Kyushu-Okinawa) noted that it had more or less leveled off at a high level. On the other hand, three regions (Hokkaido, Hokuriku, and Tokai) reported that it was declining recently, although it remained at a high level.

As for business fixed investment, the Hokkaido and Tokai regions reported that it was increasing further, four regions (Tohoku, Hokuriku, Kanto-Koshinetsu, and Kinki) noted that it was increasing, and three regions (Chugoku, Shikoku, and Kyushu-Okinawa) reported that it was picking up. Meanwhile, it was noted that business sentiment had shown some weakness, mainly in nonmanufacturing, while there were reports that it had been solid, or had continued to be on an improving trend.

As for private consumption, with the employment and income situation continuing to improve steadily, the Hokkaido region noted that it was recovering, despite differences across subregions and industries, four regions (Hokuriku, Tokai, Shikoku, and Kyushu-Okinawa) reported that it had been picking up moderately as a trend, and four other regions (Tohoku, Kanto-Koshinetsu, Kinki, and Chugoku) noted that it had been resilient as a trend. Meanwhile, many regions reported that the effects of the decline in demand following the front-loaded increase prior to the consumption tax hike had been waning on the whole.

As for sales at large retail stores, many regions reported that they had exceeded the previous year's level and the effects of the decline in demand following the front-loaded increase had been waning, or that they had been firm, or were picking up moderately.

As for automobile sales, it was reported that they had been below the previous year's level, mainly due to the decline in demand following the front-loaded increase, while there were reports that the decline in demand following the front-loaded increase had been easing gradually, or that sales had shown early signs of picking up, affected partly by the introduction of new models.

As for sales of household electrical appliances, it was reported that they had been below the previous year's level, mainly due to the decline in demand following the front-loaded increase, while there were reports that sales had been solid as a trend and the effects of the decline in demand following the front-loaded increase had been waning, or that they had begun to recover steadily.

As for travel-related demand, it was reported that demand had been solid, primarily in domestic travel, or had been firm. Meanwhile, several regions noted that the number of foreign visitors to Japan had continued to increase.

As for housing investment, four regions (Hokkaido, Kinki, Chugoku, and Kyushu-Okinawa) reported that it was declining, or that it had been weak, mainly due to the effects of the decline in demand following the front-loaded increase prior to the consumption tax hike. On the other hand, the Kanto-Koshinetsu region noted that investment had recently started to bottom out, although the decline in demand following the front-loaded increase had continued, and the Hokuriku region reported that it had been more or less flat. Meanwhile, three regions (Tohoku, Tokai, and Shikoku) noted that investment had been at a high level, or that it had been resilient as a trend.

As for production (industrial production), four regions (Hokkaido, Hokuriku, Tokai, and Kinki) reported that it had been at a high level, or that it was increasing, and the Chugoku region reported that it had been on a moderate increasing trend, albeit at a somewhat subdued pace. Amid the gradual progress in inventory adjustments in durable consumer goods and other goods stemming from effects such as those of the decline in demand following the front-loaded increase, three regions (Kanto-Koshinetsu, Shikoku, and Kyushu-Okinawa) noted that production had been more or less flat as a whole, but a pick-up had been observed in some aspects, or that it had recently started to bottom out. Meanwhile, the Tohoku region reported that production had continued to be relatively weak.

With regard to production by industry, the following developments were reported. Electronic parts and devices was increasing, and general-purpose, production and business oriented machinery was increasing moderately. Transportation equipment, electrical machinery, and information and communication electronics equipment had continued to show a decline in demand following the front-loaded increase, or had continued to see inventory adjustments take place, while there were reports that they had begun to increase. Meanwhile, iron and steel and chemicals had been more or less unchanged.

Many regions reported that the employment and income situation was improving.

Many regions reported that supply and demand conditions in the labor market had continued to improve steadily. As for household income, many regions noted that it was picking up steadily, or increasing moderately.

Appendix: Prefectures Included in Each Region

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Regional Research Division, Research and Statistics Department

Takashi Nagae (Mr.)
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