BOJ raises assessment of all 9 regional economies for 2nd straight qtr

TOKYO, Oct. 19 Kyodo -
The Bank of Japan on Monday raised its assessment of all of the nation's nine
regions for the second consecutive quarter, thanks to pickups in exports and
production, as well as an increase in public investment.
''Signs of a pickup appeared throughout the economy, although regional
differences remained,'' the central bank said in its quarterly ''Sakura
Report'' on regional economies.
All nine regions -- Hokkaido, Tohoku, Hokuriku, Kanto-Koshinetsu, Tokai, Kinki,
Chugoku, Shikoku and Kyushu-Okinawa -- saw their economic assessments revised
upward compared with the previous report in July.
The levels varied for the nine regions, however, and the central bank said five
of them -- Hokkaido, Tohoku, Hokuriku, Kinki and Shikoku -- continued to remain
in a severe situation, highlighting the slow pace of improvement in the
nation's economy.
The latest report said production had picked up in general on the back of an
increase in exports, especially in industries such as electronic parts, cars
and chemical products.
But domestic demand among consumers and companies remained weak, the report
warned.
Government stimulus programs helped buoy sales of some energy-efficient
consumer appliances and cars, but private consumption remained weak in all
regions as a whole amid the severe employment and income situation, the report
said.
Companies' capital investment decreased significantly, mainly reflecting weak
corporate profits, it added.
The central bank released the Sakura Report, akin to the U.S. Federal Reserve's
Beige Book, after a quarterly meeting of its branch managers to assess economic
and price developments in each region.
''Our country's economy is expected to recover,'' BOJ Governor Masaaki
Shirakawa said in a speech at the outset of the meeting, pointing to expected
support from a recovery in overseas demand and an increase in public
investment.
But caution is necessary regarding economic prospects as overseas financial
systems are still showing some weakness, he added.
Junichi Maeda, head of the BOJ's branch in Nagoya, Aichi Prefecture, the
heartland of Toyota Motor Corp., said at a press conference after the meeting
that the region's automobile industry increased production on the back of major
countries' stimulus schemes encouraging sales of energy-efficient cars,
together with progress in inventory adjustments.
''But the policy effects are expected to run out after April...and (company)
executives are yet to gain a clear sense of business prospects after that,'' he
said.
Hideo Hayakawa, head of the BOJ's Osaka branch, said the yen's recent
appreciation against other major currencies was an added concern for the
region's exporters, including consumer appliance makers, who were just
breathing a sigh of relief thanks to a recent pickup in exports.
The currency issue ''is having a psychological impact,'' Hayakawa told
reporters separately.
The assessment of employment conditions in the Kinki region including Osaka was
downgraded due to a continued fall in the number of employees and an
acceleration in the pace of income decline.
The BOJ meets with managers of its 32 branch offices, together with senior
officials from overseas offices and the head office, every three months to
assess the state of regional economies in conducting monetary policy.
==Kyodo