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Monday, the Bank of Japan raised its regional economic assessment and said the country's all nine regions are improving as the nation recovers from its worst recession.
"Signs of picking up had appeared throughout the economy, although regional differences remained," the central bank said in its latest quarterly regional economic report. In its previous assessment, the central bank had said economic conditions continued to be severe, although they had recently begun to stop worsening, with the pace of deterioration slowing.
Compared with the assessment in July, all regions revised their assessments, although Hokkaido, Tohoku, Hokuriku, Kinki, and Shikoku continued to report that their economies were in a severe situation, the report said. The assessment is compiled by regional branches of the central bank.
Private consumption continued to be weak in all regions amid the severe employment and income situation, despite the appearance of some policy effects. Only Hokkaido showed some signs of picking up, reflecting the stimulus effect. Business fixed investment declined substantially, mainly reflecting weak corporate profits. Compared with the previous assessment, all regions maintained their view regarding investment.
Industrial production picked up in all regions, although there were some regional differences in the pace of increase. While industrial output picked up in Tohoku, Hokuriku, Kinki, Chugoku and Shikoku, it showed some signs of picking up in Hokkaido and continued to increase in Kanto-Koshinetsu, Tokai and Kyushu-Okinawa.
The employment and income situation continued to deteriorate as many regions maintained their previous assessments, but Kinki reported a deteriorating situation worse than its previous view. On the other hand, Tohoku and Tokai reported that the pace of deterioration had slowed. As for household income, almost all regions maintained their previous assessments with the exception of Kinki, where the pace of decline accelerated.
In a speech to a meeting of the central bank's regional branch managers, BoJ Governor Masaaki Shirakawa said the Japanese economy is picking up, though domestic demand remains weak. Last week, the central bank raised its assessment for the economy.
In its monthly report of recent economic and financial developments, the BoJ said Japan's economy has started to pick up compared to its last month's view that economic conditions are showing signs of recovery. Looking ahead, the central bank said economic conditions are likely to improve gradually. In September, the BoJ said economic conditions are likely to start improving in the near future.
On Friday, the Cabinet Office maintained its overall assessment and said the world's second biggest economy is picking up, but remains in a difficult situation such as a high unemployment rate.
However, these positive assessments are unlikely to prompt the central bank to commence hiking rates and to withdraw other policy stimulus measures. On October 14, the BoJ decided to leave its key interest rate unchanged at 0.1%. The last change in the rate was a 0.1% cut in December. However, Shirakawa had said the corporate debt issuance conditions have improved and the need for policy to support the market is fading, indicating that the central bank would possibly stop its corporate debt purchase measures at the year-end.
Earlier in the day, minutes from the September 16 and 17 monetary policy meeting revealed that BoJ board members are of the view that there was a decreasing need to emphasize financial conditions as a downside risk. The board added that the positive effects of the crisis measures it had undertaken were beginning to fade, while at the same time drawing attention to the effect that the rising yen was having on the Japanese economy.
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