The Bank of Japan on Thursday upgraded its assessment for five of the country’s nine regional economies compared with three months earlier and used the word recovery for every region on the back of solid consumer spending before the consumption tax increase in April and improvement in employment and income.
It is the first time since April 2005, when the BOJ started the quarterly Sakura Report, that it used the word recovery to assess the state of all of the regional economies.
The BOJ left its assessment of four regions, including Tohoku and the Kanto-Koshinetsu area including Tokyo, unchanged.
The Tohoku and Tokai regions “have been recovering,” while six regions, including Kanto-Koshinetsu and Kinki, “have been recovering moderately,” the report said.
The BOJ said the Hokuriku region “has begun to recover moderately,” upgrading its view.
In its preceding report in October, the BOJ lifted its view of all nine regional economies, with eight of them being described as recovering.
On consumer spending, four regional BOJ branches upgraded their assessments, due partly to increased demand for vehicles and housing ahead of the consumption tax hike in April, a BOJ official said.
Not only last-minute demand before the consumption tax hike but a pickup in employment and income conditions are contributing to improvement in personal spending, the official said.
On housing investment, the Hokuriku and Kanto-Koshinetsu branches lifted their assessments, but the Hokkaido branch downgraded its view, saying the pace of pickup had slowed, according to the report released after a meeting of the branch managers.
BOJ Gov. Haruhiko Kuroda said earlier Thursday the national economy is expected to continue recovering moderately, although it will be affected by swings in demand before and after the April tax hike.
“The economy is expected to continue a moderate recovery as a trend, while it will be affected by the front-loaded increase in demand ahead of the consumption tax hike and subsequent decline after the hike,” he was quoted as telling the branch managers.