MNI POLICY: BOJ Report: Regions See Recovery Broadly On Track

--BOJ: 3 Out of 9 Regions Cut Econ View From January, Although Recovery Intact

--BOJ: 5 Regions Keep Outlook Unchanged, 1 Ups View

     TOKYO (MNI) - Japan's economy continues to either expand or recover in all

nine regions, indicating that the virtuous cycle from profits to spending

continue working, according to the Bank of Japan's latest quarterly regional

economic report.

     However, the scale of the recovery was revised moderately lower by three of

the nine regions.

     "Compared with the previous assessment in January 2019, with the effects of

the slowdown in overseas economies on exports and production being pointed out,

five regions (Kanto-Koshinetsu, Tokai, Kinki, Chugoku, and Shikoku) left their

assessments unchanged, while three regions (Tohoku, Hokuriku, and

Kyushu-Okinawa) revised down their assessments," the BOJ said in the report

published Monday

     "Meanwhile, the Hokkaido region revised up its assessment, due to the

dissipation of downward pressure stemming from the 2018 Hokkaido Eastern

Earthquake," the BOJ said.

     "The background behind these assessments was that domestic demand had

continued to show firm developments, with a virtuous cycle from income to

spending operating in both the corporate and household sectors," the report

added.

     "Specifically, although exports and production have been affected by the

slowdown in overseas economies recently, business fixed investment has continued

on an increasing trend, with corporate profits staying at a favorable level on

the whole," it continued.

     "Private consumption has been increasing moderately, albeit with

fluctuations, against the background of steady improvement in the employment and

income situation," the BOJ noted.

     The regional economic assessment is consistent with the BOJ's board outline

in March, when they maintained the overall outlook, saying "Japan's economy is

expanding moderately, with a virtuous cycle from income to spending operating,"

adding that the economy "is likely to continue its moderate expansion."

     However, in the wake of weaker data, the BOJ lowered its assessment of

exports and industrial production as well as overseas economies, reflecting a

slowing in China and Europe.

     The key points from the report:

     --"Private consumption has been increasing moderately, albeit with

fluctuations, against the background of steady improvement in the employment and

income situation," the report said.

     --A production machine company said, "Orders of semi-conductor equipment to

China is weakening and exports also fell. If a wait-and-see attitude

strengthened due to the trade friction, orders will fall further and we need to

carefully monitor developments."

     --A nonferrous metal firm said, "Production has fallen 30-40% on year in

the wake of the drop in capital investment in China."

     --A company said, "Orders for construction equipment from China are

increasing in the wake of the China's economic stimulus measures."

     --A automobile firm said, "Exports to China fell but the risk is small that

exports fall further."

     --Some companies have decided to put off the implement of capital

investment.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: MMJBJ$,M$A$$$,M$J$$$,MT$$$$]