Monday, October 21, 2013
DJ: BOJ Raises Views On All 9 Regional Econs For First Time Since April
TOKYO--The Bank of Japan Monday raised its view of all nine of the country's regional economies, marking the second across-the-board upgrade in the central bank's assessment of local economies this year.
The upward revision reflected "some improvement observed in the employment and income situation, amid firm domestic demand and a moderate increase in production," the central bank said in its latest quarterly regional economic assessment, known as the "Sakura" report. The BOJ last raised its view of all the regions in April.
The BOJ described the economies of all but the Hokuriku region in northwest Japan as either recovering or recovering moderately. It was the first time for the central bank to use the word "recover" to characterize the economies of the Shikoku and Hokkaido areas since it started publishing the Sakura report in 2005.
In the report, four regions upgraded their assessments of business investment--something the central bank considers crucial for making the nationwide economic recovery that commenced at the start of this year sustainable.
Five regions raised their views on income conditions, while the same number of regions lifted their assessment of consumer spending, the BOJ said. Eight regions became more upbeat about industrial production. Six regions lifted their assessment of housing investment amid strong demand for homes ahead of a planned three-percentage point increase in the sales tax in April next year.
Investors will likely scrutinize the report, which could influence the BOJ policy board's views on the economy. At their planned next policy meeting on Oct. 31, the nine board members will release their new three-year forecast for prices and the economy--one of the most crucial hints on whether and when the central bank may take additional monetary easing steps.
Citing Japan's strong economic recovery so far this year, the central bank has maintained it can hit its 2% inflation target in one and a half years from now on the back of its aggressive asset-buying program. But a majority of private-sector economists say the bank has to do more, with some of them expecting it will take fresh easing measures in as early as next April.
The Japanese equivalent of the Federal Reserve's "beige book" survey summarizing the state of regional U.S. economies, the Sakura report sums up the views of managers from the BOJ's 32 domestic branches. The previous report released in July raised the assessment of eight of the nine regions, noting improving household and business sentiment.