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

--BOJ: 6 Out of 9 Japan regions Cut Econ View From Oct, 3 Regions Cut

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

its nine regions as domestic demand, such as capital investment and private

consumption, continue rising, the Bank of Japan's quarterly regional economic

report showed Wednesday.

     "According to assessment from regions across Japan, all nine regions

reported that their economy had been either expanding or recovering," the report

said.

     The report noted that the slowdown in overseas economies and natural

disasters were affecting exports, production and business sentiment, but the

impact was limited.

     It added, "The background to this was that domestic demand, in terms of

such items as business fixed investment and private consumption, had continued

on an uptrend, with a virtuous cycle from income to spending operating in both

the corporate and household sectors, although exports, production and business

sentiment had shown some weakness, mainly affected by the slowdown in overseas

economies and natural disasters."

     Although still seeing a recovery, three of the nine regions trimmed their

assessment from three months ago, with the remaining six regions keeping their

view unchanged.

     The key points from the report:

     --Many regions said that capital investment was increasing or was flat at

high levels and private consumption was increasing or recovering.

     IMPACT OF NATURAL DISASTERS

     --Auto parts factories were affected and they are affecting overall motor

production. The impact was serious, a transport equipment machine company said.

     --Orders and production plunged due to the damage of supply chain. It is

unlikely that demand picks up immediately amid the drop of production, a

transport equipment machine firm said.

     OVERSEAS DEMAND

     --Production of auto parts continues falling. A quick recovery of

production is not expected on the back of weak global sales for automobiles, a

transport equipment firm in Yokohama said.

     --Orders fell sharply as customers continue to refrain from implementing

capital investment. The outlook for recovery doesn't come in sight, a production

machine firm in Kanazawa said.

     CAPITAL INVESTMENT

     --Demand for 5G communication equipment recovered sharply and there was an

accelerated implementation of capital investment planned in fiscal 2020, an

electronic parts and device company in Yokohama said.

     --An electronic parts and device firm in Akita said the company keeps high

capital investment plan in fiscal 2020 and stands ready to actively implement

capex.

     POST-TAX HIKE SPENDING

     --A commercial area shop said the impact of worsening of consumer sentiment

and the fall in real income caused by the tax hike wasn't noticed.

     --The number of visitors has fallen and people might have saved money after

the tax hike, a drinking/eating store.

     --The registration of new automobiles has fallen sharply after the tax hike

but the company expects orders to pick up due to the introduction of new cars,

an automobile sales firm in Kanazawa said.

--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

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