1. General Summary of Regional Economic and Industrial Research Results (from July to September 2014) (1/2) Reference 2

Transcription

1 1. General Summary of al Economic and Industrial Research Results (from July to September 2014) (1/2) Reference 2 The overall assessment remains the same as that in the previous quarter. As for the assessments for each economic region, those in Hokuriku and Okinawa have been revised upward from the previous quarter, those in Hokkaido, Kanto, Tokai, Chugoku, and Shikoku remain the same as in the previous quarter, and those in Tohoku, Kinki, and Kyushu have been revised downward from the previous quarter. Production: In the automobile and automobile-related industries, centered on domestic demand, the effects of a reactionary decline after the last-minute increased demand preceding the consumption tax hike remained in Tohoku, Tokai, Chugoku, and Kyushu. In the home appliances industry, a decline in production was seen due to the effects of the unstable weather this summer in Kinki. On the other hand, the general-purpose, production, and business oriented machinery industries remain steady for overseas demand in Kanto, Hokuriku, Chugoku, and Kyushu. Moreover, production in the electronic devices industry remains steady for smartphones for export in Tohoku, Tokai, Chugoku, and Kyushu. Business investment: In manufacturing industries, business investment continued to be centered on the maintenance and renewal of equipment nationwide from the previous quarter, and there were some movements in investment for production capacity enhancement and setting up plants. In non-manufacturing industries, movements of opening new stores and remodeling existing stores have continued to be seen nationwide in the retail industry, while some retailers in Tohoku and Tokai responded that they would reconsider their plans to open new stores due to soaring construction costs.

2 1. General Summary of al Economic and Industrial Research Results (from July to September 2014) (2/2) Employment situation: In manufacturing industries, some companies faced a labor shortage with movements seen of an increase in employment due to increases in production and orders received, while some other companies had a sense of an excess labor due to current low production and orders received, resulting in slower movement of employment than before. In non-manufacturing industries, a labor shortage continues to be seen in the retail, services, and construction industries on a nationwide basis, and some respondents pointed out that they faced difficulty in securing part-timers. Private consumption: In the retail industry, the effects of a reactionary decline after the last-minute increased demand preceding the consumption tax hike are fading away, with sales of luxury goods at department stores and food at supermarkets picking up. On the other hand, the effects of a reactionary decline after the last-minute increased demand preceding the consumption tax hike remain in automobile sales nationwide. Moreover, sales of clothing and home appliances were sluggish due to the effects of the unstable weather. As for travel, some respondents pointed out that the number of foreign tourists increased in Hokkaido, Kanto, Hokuriku, Kinki, Kyushu, and Okinawa, resulting in an increase in sales.

3 Description of sector-specific (major comments) Hokkaido Showing some weak movements amid a continuous moderate recovery trend ( ) Production remains flat. ( ) Production in the ceramics, stone and clay, and metal products industries, which have been steady, is in a weak tone affected by a backlog of shipments caused by a delay in progress of construction work. On the other hand, production in the general machinery industry is brisk with an increase in orders received for harvesting machinery ahead of early autumn, in addition to fresh starts being made at some oil refineries that stopped crude oil treatment as petrochemical plants in July, thus, production as a whole remains flat. Business investment shows signs of picking up. ( ) In addition to the maintenance and renewal of equipment, new plans can be seen including the setting up of manufacturing lines of food, electronic parts, and others in manufacturing industries, as well as active openings of new large-scale retail stores, convenience stores, and other stores and remodeling accommodations in non-manufacturing industries. Employment is moderately improving. ( ) The effective ratio of job offers to applicants has been on a recovery trend over the long term, though it is at a lower level compared with the national ratio. On the other hand, mismatches are arising with labor shortages in terms of qualified engineers including architects in the construction industry, drivers in the transportation and taxi industries, and site staff offering personal services, etc. in hotels and other accommodations and the retail industry. Under these situations, there are some construction companies that struggle to develop tangible and intangible working environment for employing female engineers. Private consumption is continuing on a recovery trend although there was s some weakness. ( ) Sales at large-scale retail stores are continuing on a recovery trend with the fading away of a reactionary decline after the last-minute increased demand preceding the consumption tax hike, such as a recovery to the same level as the previous year. Although sales of luxury goods including watches and jewelry at department stores were brisk, supported by the wealthy, there was some weakness, such as poor sales of new cars including mini cars, in addition to some concerns about a delay in the recovery of clothing sales in the volume zone segment. As for travel, the number of tourists to Hokkaido remains flat recently partly due to the high level in the previous year, while inbound travel continues to be brisk, and the hotel occupancy rate remains at a high level. - Shipment of construction steel was postponed from the initial prospect partly due to delay in the progress of construction work. This leads to piling up of inventory, so we are concerned about the future effects on production. (Large manufacturer) - We feel that budget-minded attitudes have become strong since April. There is an increase in the number of consumers who spend money on a special occasion or on a special item even if the price is high but buy things which can be bought anywhere from places where the price is lowest, even if the price difference is small. (Large retailer) - We hired female engineers. We had only male employees, so we are struggling to make efforts to develop tangible aspects of working environment, such as a toilets and locker rooms, as well as intangible aspects such as changing the employment regulations including child rearing and nursing care. (Small- and medium-sized constructor)

4 Description of sector-specific (major comments) Tohoku Showing some weak movements amid a moderate recovery trend ( ) Production is in a weak tone. ( ) Production is in a weaker state in industries such as the transport equipment industry due to a reactionary decline after the last-minute increased demand preceding the consumption tax hike, the general machinery industry with sluggish exports, and the information and communication equipment industry in which replacement demand by purchases of PCs had peaked, as well as the steel, paper and pulp industries. On the other hand, production remains steady in industries such as the electronic parts and devices with steady exports for smartphones, the ceramics, stone and clay industry due to disaster reconstruction demand, and the food industry. Business investment is moderately picking up. ( ) In the manufacturing industries, there are many companies that have increased investment compared with that in the previous year, with revisions being made to increase investment due to new orders received, in addition to investment for production capacity enhancement reflecting the favorable business. In non-manufacturing industries, although business investment is centered on maintenance and renewal of equipment, and continues to show proactive attitudes to opening new stores among retailers, there are some movements of postponing new plans to open stores partly due to rising construction costs. The employment situation continues to improve. ( ) The employment situation continues to improve, with both the ratio of new job offers to applicants and the effective ratio of job offers to applicants remaining at a high level, supported by reconstruction demand. There is a strong sense of an insufficient number of salespersons in the retail industry and engineers centered on site management in the construction industry. Although some manufacturers have a shortage of employees, most manufacturers have an appropriate number. In coastal areas in disaster-affected prefectures, the effective ratio of job offers to applicants for medical and welfare related jobs and engineers, as well as sales and service and production-related personnel is at a higher level than that in other areas, creating a strong sense of labor shortage among job seekers, while a noticeable mismatch of jobs, etc. such as less offers for clerical staff among job openings, is causing the severe situation to continue. Private consumption is on a trend of picking up. ( ) Sales at large-scale retail stores shows a reactionary decline after the last-minute demand accompanying the consumption tax hike, but are on a recovery trend centered on steady food and beverage sales. Sales of home appliances and the number of sales of new cars declined from the levels of the previous year. Although some companies see that private consumption is steady, there are some concerns about a delay in recovery from the reactionary decline, effects of a price hike caused by the depreciation of the yen on consumption behavior, and movements of wage raises. - Although production decreased mainly due to a partial decline in exports and maintenance of equipment, our business condition is on an improving trend reflecting an improvement of sales environment caused by the depreciation of the yen and economic recovery. (Large manufacturer/miyagi Prefecture) -Private consumption is steady, but low-end and budget-minded attitudes remain after the consumption tax hike, so we have stronger uncertainties about the future. (Large retailer/fukushima Prefecture) -Demand for food is steady, but that for core clothing continues to be sluggish. It is necessary to make a mechanism to stimulate consumer confidence. (Large retailer/iwate Prefecture)

5 -Compared to demand forecast at the time when the business plan was formulated, a decline in actual orders received tends to be larger. (Small- and medium-sized manufacturer/ibaraki Prefecture) - We will make business investment for renewal of aging equipment and improvement of productivity. (Small- and medium-sized manufacturer/tochigi Prefecture) - With the prospect for a full-scale shortage of employees in the future, it is necessary to promote efforts to extend the retirement age, as well as strengthening of a recruitment activity. (Large general constructor/niigata Prefecture) - There is the low-end attitude of consumers, while there is also consumption of brands (specialty), resulting in further advancement of a vivid polarization in consumption. (Smalland medium-sized retailer/saitama Prefecture) Description of sector-specific (major comments) Kanto Picking up ( ) Production has been weakening. ( ) Although production in the general machinery industry is steady for automobiles and machine tools, there is a decline in orders received due to a remaining reaction to the consumption tax hike in some industries. Moreover, in the transport equipment industry, a decline in domestic demand is offset by brisk demand in North America, while there are concerns about effects on the domestic production in the transport equipment-related industry, such as receiving fewer orders from companies that have moved production bases overseas. Business investment is moderately picking up. ( ) In manufacturing industries, although there are some companies that make business investment carefully, many companies make active changes by utilizing government subsidies and maintain the active initial plans. Moreover, investment in non-manufacturing industries are centered on remodeling and aging countermeasures of existing stores and opening new stores as the initial plans. The employment situation is moderately picking up. ( ) In manufacturing industries, there are movements of increasing the number of employees, reflecting an increase in production and orders received in some industries. In non-manufacturing industries, there is a sense of an insufficient number of engineers at construction sites to conduct site management and salespersons at stores in the retail industry, etc. Companies make efforts to improve working including salaries, but face a situation of failing to secure as many part-timers, temporary staff, etc. as they expected. Especially among small- and medium-sized enterprises and local companies, there are severe situations to secure human resources. Private consumption is picking up. ( ) The reactionary decline due to the consumption tax hike seen centered on luxury goods at department stores has generally recovered with a few exceptions, showing brisk sales of luxury goods and inbound duty-free items. Automobile sales continue to show a slowing trend mainly due to the effects of the reactionary decline. Sales at convenience stores are brisk mainly due to product development matching consumption characteristics and continuous introduction of new products despite being largely affected by unstable weather. On the other hand, regarding travel, domestic trips continue to be brisk, and inbound tourists are also brisk. As for daily necessities and restaurants, consumption is weak due to the persisting budget-minded attitudes of consumers, although there are some hopeful signs.

6 Chubu (Tokai) Improving moderately ( ) Description of sector-specific (major comments) Production has been flat. ( ) In the core automobile-related industries, overseas demand remains flat, while domestic demand is in a weaker state. Production in the electronic parts and devices industry shows signs of increasing mainly for smartphones. Production of metal-cutting machinery shows policy effects including the subsidy and the investment promotion tax system for production equipment in terms of domestic demand. In addition, the automobile- and housing-related industries are experiencing a reactionary decline after the lastminute increased demand preceding the consumption tax hike. Some small- and medium-sized companies are facing a decline in profits, reflecting a rise in raw material costs, fuel costs, and electricity rate. Business investment is increasing moderately. ( ) In manufacturing industries, investment in production capacity enhancement in North America and Asia is evident, while domestic investment centers on investment for streamlining, efficiency, maintenance and renewal. In non-manufacturing industries including the retail industry, there are movements toward remodeling stores and opening new stores, such as department stores and supermarkets. However, there are some retailers reconsidering plans to open new stores and remodeling stores due to soaring construction costs. The employment situation is steadily improving. ( ) In manufacturing industries, production can be completed with overtime work and the current number of non-regular workers in many companies. In addition, some small- and medium-sized enterprises have intended to hire excellent human resources for overseas development and technology development, but such human resources are hired by other companies. In nonmanufacturing industries, the sense of an insufficient number of non-regular employees has increased in the retail industry, including supermarkets, and a situation persists in which the number of applicants is insufficient to meet the number of offers. Private consumption is moderately picking up. ( ) Sales at department stores and supermarkets show effects of a reactionary decline after the last-minute increased demand preceding the consumption tax hike and unstable weather. Some respondents pointed out that sales at department stores as a whole were recovering, with some luxury goods showing good performance in addition to the effect of remodeling stores. At supermarkets, some respondents pointed out that sales are recovering, reflecting the sales promotion effects, but competition is intensified between businesses handling similar products. For automobile sales, a reactionary decline after the last-minute increased demand preceding the consumption tax hike has been observed. - Although the reactionary decline after last-minute demand preceding the consumption tax hike in the previous quarter was not as large as we assumed, the effects of the reaction remain in the current quarter, having not recovered as much as we expected. (Large motor vehicle parts manufacturer/aichi Prefecture) - The reactionary decline after last-minute increased demand preceding the consumption tax hike has not recovered as much as we assumed. Moreover, we are concerned about a decline in profits due to soaring fuel costs. (Small- and medium-sized motor vehicle parts manufacturer/aichi Prefecture) - Although effects of unstable weather were seen, there are movements in sales of luxury goods. We see that demand is recovered from a reactionary decline after last-minute increased demand preceding the consumption tax hike. (Large department store/aichi Prefecture)

7 Chubu (Hokuriku) Showing some signs of improvement ( ) Description of sector-specific (major comments) Production is increasing. ( ) Production in the chemical industry continues to be brisk, centered on generic drugs. Production in the electronic parts and devices industry is picking up for new smartphone models and automobiles mainly for overseas. The general-purpose, production, and business oriented machinery industries remain at a high level for business investment-related sectors with overseas demand and economic policy effects in Japan. Production in the textile industry remains flat, as demand for highvalue-added clothing for overseas has increased, while that for automobiles has declined. Production in the metal products industry is in a weaker state partly due to a decline in housing starts for core aluminum building materials. Business investment is increasing. ( ) In manufacturing industries, investment for enhancing equipment in response to R&D for new products and production increases, and investment for setting up new plants has been made by utilizing subsidies and tax incentives. Moreover, overseas investment has intensified, including setting up and adding plants where there is demand. In non-manufacturing industries, energysaving investment has been made, aiming at cost reduction. In addition, there is movement for the purpose of improving the ability of attracting visitors ahead of the opening of Kanazawa Station for the Hokuriku Shinkansen. The employment situation is moderately improving. ( ) In manufacturing industries, companies whose production is increasing are handling labor shortages by increasing non-regular employees and shifting regular employees from other departments, but there are some movements of increasing regular employees, including converting non-regular employees to regular employees in light of securing human resources. In non-manufacturing industries, although job offers continue to be made with improved working, including wage raises, the sense of labor shortage has become even stronger since job seekers flow into jobs with better working as much as possible. Private consumption is in a weaker state. ( ) At department stores and supermarkets, sales of food and beverages remain steady, but sales of clothing, etc. failed to grow mainly due to the unstable weather in summer. Consumption behavior is sound, with consumers buying only items that they really need, while there is a tendency for good sales of popular or high added-value items, even at a high price. In addition, the number of foreign tourists has increased, while effects of the consumption tax hike remain in sales of automobiles, home appliances, houses, etc. - Production of electronic parts has been brisk since around the latter half of July, in response to new smartphone models for U.S. and Chinese manufacturers. (Large manufacturer/ishikawa Prefecture) -Although the number of foreign tourists in hot spring resorts continues to increase thanks to the depreciation of the yen, the number of domestic tourists declined from the levels of the previous year due to the effects of unstable weather in addition to budget-minded attitudes caused by the consumption tax hike and a rise in gasoline price. (Tourist agent /Ishikawa Prefecture) - Price incentives become less effective, while there is a tendency for good sales of popular or high added-value items, even at a high price. (Large retailer/toyama Prefecture)

8 Kinki Showing some pause while showing signs of improvement ( ) Description of sector-specific (major comments) Production remains flat. ( ) Although production in industries such as electronic parts, solar cells, and automobile parts for North America and other foreign regions remains brisk, a reactionary decline after the last-minute increased demand preceding the consumption tax hike continues to be seen in the home appliances and mini cars industries, and the home appliances industry was also affected by the unstable weather this summer, remaining flat for production as a whole. As for prospects, brisk sales will continue, centered on industries such as electronic parts and automobile parts for overseas, as well as being on a recovery trend in the home appliances and mini cars industries that were affected by the consumption tax hike. Business investment is picking up. ( ) Business investment is picking up in all industries, and investment aiming at launching new business and capacity enhancement is made centered on large companies. In small- and medium-sized manufacturers, renewal of aging equipment, energy saving and productivity improvement measures by automation, and efforts for new business are observed. In nonmanufacturing industries, willingness to invest in establishing logistic facilities, opening new stores, etc. is observed, taking business into account. The employment situation is moderately improving, spreading a sense of labor shortage. ( ) Industries including automobile-related and non-manufacturing industries, in which the business have been improving, face a labor shortage, and some respondents continue to point out that the number of applicants is insufficient to meet the number of offers and it is difficult to hire new employees. There are movements of increased hiring of regular employees and part-timers, and also movements of hiring parttimers and temporary staff as regular employees. Moreover, movements of hiring mid-career employees, including fully-qualified personnel and engineers, and looking for human resources for overseas business development towards new business development continue to be seen. Private consumption is picking up although there are some weak movements. ( ) A recovery from a reactionary decline after the last-minute increased demand preceding the consumption tax hike fell behind the initial assumption centered on consumer durables partly due to unstable weather, but consumption of daily consumable goods and luxury goods has already recovered to the previous level. Sales of mini cars declined mainly due to the elimination of the backlog of orders received in accordance with the last-minute demand. Purchases of luxury goods, accommodation, etc. by foreign visitors continue to increase. - The domestic production plan in the current quarter declined from the result in the previous year. This was because production had increased due to the extreme heat last year and the last-minute increased demand preceding the consumption tax hike had led to a significant increase in production since the end of last year. (Large manufacturer/osaka Prefecture) - We will remodel the clean room to enter into the medical device sector. (Small- and medium-sized manufacturer/nara Prefecture) - The number of foreign tourists exceeded the level of the same month in the previous year for the 30th consecutive month, leading to brisk sales at duty-free shops. (Large transport business/osaka Prefecture)

9 Chugoku Picking up ( ) Description of sector-specific (major comments) Production remains flat. ( ) Production in the steel industry remains flat as domestic demand remains steady. Production in the chemical industry remains flat with production commensurate with domestic sales. Production in the automobile industry has slightly decreased with a reduction in overseas demand amid a continuous reaction to the last-minute increased demand preceding the consumption tax hike. Production in the general-purpose, production, and business oriented machinery industries has slightly increased due to steady overseas demand centered on production equipment. Production in the electronic parts and devices industry remains flat with the continuous steady demand for smartphones uses for overseas. Business investment is picking up. ( ) In manufacturing industries, in addition to investment for capacity enhancement including setting up new equipment, maintenance and renewal, there is also a positive trend toward increased orders received and response to new products. In non-manufacturing industries, although there has been a reactionary decline after large-scale store openings in the retail industry in the previous year, continuing investment in improving management efficiency is seen. The employment situation had continued to be on an improvement trend, but is now slowing. ( ) There is a shortage of employees in production and technical fields due to an increase in production and orders received in the manufacturing and construction industries, and there is also a shortage of employees in the sales field associated with opening new stores in the retail industry. The employment situation had improved across a wide range of industries, but is now slowing resulting in a decline in the number of new job offers. Private consumption remains flat although there are some weak movements. ( ) Although sales of summer items including summer clothing and air conditioners were sluggish due to the effects of unstable weather, sales of watches, cosmetics, etc. show good performance, and sales of autumn clothing are brisk in accordance with a drop in temperature. Automobile sales decreased partly due to a reaction to the last-minute increased demand preceding the consumption tax hike despite positive effects of the introduction of new car models. - We aim to recover from a reactionary decline after the last-minute increased demand preceding the consumption tax hike for domestic demand, but it slightly declined partly because new car models are about to be introduced in autumn. (Large manufacturer/hiroshima Prefecture) - The yen s sharp depreciation leads to an increase in costs, resulting in sharp deterioration of the earnings environment. In our company, fluctuation by 1 yen has an effect worth 60 million yen. (Large manufacturer/yamaguchi Prefecture) - We see a recovery from a reactionary decline after the last-minute increased demand preceding the consumption tax hike. Our sales are increasing, and profit is also recovering. (Large retailer/okayama Prefecture) - As for employees, although a labor shortage remains to be seen, there is variability among sectors and company scales. The civil engineering industry has no sense of an insufficient number of employees apart from the future. The construction business is extremely busy. However, the construction industry has narrowed down employees due to a reduction in public works over the long term, and is cautious about hiring a large number of employees due to the current business. (Constructor/Hiroshima Prefecture)

10 Description of sector-specific (major comments) Shikoku Showing weak movements while remaining on an improving trend ( ) Production has been weakening. ( ) In the food and electrical machinery industries, production remains at a high level. Production shows signs of picking up due to an increasing number of orders in the transport equipment (shipbuilding) industry. On the other hand, production in industries including the textiles, nonferrous metal, ceramics, stone and clay industries remains almost flat, and production in the plastic products, metal products, and pulp, paper, and paper-processed products industries has remaining effects of a reaction to last-minute increased demand accompanying the consumption tax hike, showing weak movements. As for projections, production is expected to show signs of moderate picking up due to the improvement of the export environment, although there are concerns about a rise in crude oil and raw materials prices caused by the current depreciation of the yen, etc. Business investment shows some signs of picking up. ( ) Some companies have limited investment by focusing on the maintenance and renewal of equipment partly due to uncertainties about the future in industries including the food, chemical, petroleum and coal products, pulp, paper, paper-processed products industries. On the other hand, active investment is seen in response to a production increase and new orders received, and for R&D and new store openings in some industries including the textiles, plastic products, electrical machinery, transport equipment (shipbuilding), retail, and electric work industries. In addition, some companies have changed their plans including making business investment ahead of schedule and increasing investment to respond to capacity enhancement. The employment situation is improving. ( ) While the employment situation is improving in the majority of companies indicating that they have an appropriate number of employees, a wide range of industries, including the electrical machinery, transport equipment (shipbuilding), retail, services, and electric work industries, indicate that they have an insufficient or a slightly insufficient number of employees and a sense of labor shortage, as they did in the previous survey. As for a future movement, many industries and companies intend to increase the number of employees, continuing to show enhanced willingness of companies to hire employees. Private consumption shows some signs of picking up amid weak movements ( ) Sales at department stores and supermarkets show signs of moderate picking up with a diminished reaction of the last-minute increased demand preceding the consumption tax hike. Sales at convenience stores remain steady mainly due to a continuous increase in the number of stores. On the other hand, automobile sales show weak movements with a remaining reaction of the last-minute increased demand preceding the consumption tax hike, and the sales of home appliances remain sluggish partly due to the weather effects. Service consumption (travel) shows weak movements. - In addition to the remaining reactionary decline after the last-minute increased demand preceding the consumption tax hike, the situations of orders received deteriorated in August and September. (Large manufacturer/tokushima Prefecture) - We will expand production lines ahead of the initial plan in accordance with the conclusion of the business negotiation for new orders received. (Large manufacturer/tokushima Prefecture) - We increased new regular employees, non-regular employees, and temporary staff to respond to an increase in production. (Large manufacturer/ehime Prefecture) - We raised prices in July due to soaring material costs. Price increases may become part of the factors for a decline in orders received. (Small- and medium-sized constructor/kagawa Prefecture)

11 Description of sector-specific (major comments) Kyushu Remaining flat ( ) Production remains flat. ( ) In the transport equipment industry, the effects of a reactionary decline after the last-minute increased demand preceding the consumption tax hike remains in the core automobile industry, and effects of a labor shortage, etc. are seen in the shipbuilding industry in which the number of orders received has increased. In the electronic parts and devices industry, demand for smartphones is brisk, while that for general consumer products, etc. continues to be sluggish. The production machinery and electrical machinery industries show brisk demand in China, and also show signs of picking up in semiconductor-related industries in Japan. In the photovoltaic generation-related industries in which demand continues to be brisk, there are concerns about a future demand trend. In the steel and chemical industries, some respondents pointed out that a recovery of demand is lower than expected, and there are some effects of decelerating Chinese markets. In addition, some respondents pointed out that there are effects of the unstable weather and that demand grows at a sluggish pace. Business investment is picking up. ( ) In manufacturing industries, there are signs of intensive investment in competitive sectors including high-value-added products in accordance with the reorganization of plants and business, etc., and movements toward promotion of self-manufacturing and automation, etc. can be observed. On the other hand, in small- and medium-sized enterprises, although there are positive attitudes including higher production investment followed by business recovery, some respondents pointed out that sluggish demand led to failing to make business investment as planned, in addition to a challenge of raising funds. In nonmanufacturing industries, there are positive attitudes towards continuous expanding and remodeling of stores, and there are also movements of responding to electric vehicles and taking in new demand including inbound demand from overseas. On the other hand, there are challenges such as a decrease in suitable places for mega solar power plants that are in the process of being sited in Kyushu. The employment situation is picking up. ( ) In manufacturing industries, some companies have a sense of a labor surplus due to the current stagnant orders received, but there is a shortage of personnel necessary for production in industries including the transport equipment and production machinery industries. In non-manufacturing industries, the situation of continuous trend of a labor shortage is observed, such as a high personnel turnover rate in jobs with relatively severe employment including the service and transport industries. On the other hand, the construction industry in which a shortage of engineers at sites continues nationwide has a sense of labor surplus for sales personnel, etc. reflecting effects of sluggish bidding of public works and stagnant sales of houses. As for the hiring of new employees, a trend of increasing employment can be seen both in manufacturing and non-manufacturing industries in light of passing on skills and human resource development. Private consumption shows signs of picking up. ( ) At large-scale retail stores, there are some effects of a reaction of the lastminute increased demand preceding the consumption tax hike. In such a condition, sales of high-value-added products show good performance with increased tastes of consumers for quality and health, while the situation of intensified low-end attitude of customers is observed for daily necessities, etc. In addition, some respondents pointed out that inbound sales from overseas are increasing. Sales of home appliances are sluggish in summer appliances due to the unstable weather, but sales of other appliances are generally steady, and are expected to recover in the next quarter. As for the sales of travel and leisure-related sectors and automobile, while some respondents pointed out the brisk sales in the rich senior generation and high-income class, full scale recovery has not to be seen. Sales of houses and condominiums continue to be sluggish partly due to a decline in consumer confidence and a rise in prices. - Although orders received remain steady, we have reached the limit of manpower and equipment capacity with the current orders received. We are in a situation in which we cannot increase production any more. (Small- and medium-sized manufacturer/kagoshima Prefecture) - We will make large-scale business investment from the second half of this year towards an increase in production of competitive products in accordance with reorganization of plants. (Large manufacturer/kumamoto Prefecture) - There are many female employees who resign due to marriage, childbirth and other reasons because of working on weekends, long business hours, etc., resulting in a labor shortage on a constant basis. (Large services business/fukuoka Prefecture) - Although the number of customers decreased due to the effects of the consumption tax hike, per-customer spending is rising due to a rise in high-value-added taste including quality and health. (Large retailer/fukuoka Prefecture)

12 Description of sector-specific (major comments) Okinawa Improving ( ) Production remains flat. ( ) Some respondents pointed out that demand is increasing due to an increase in the number of tourists entering into the tourist season. On the other hand, profits of some industries have declined, due to an inability to increase prices despite the relative increase in prices of imported products and unit costs of materials imported from overseas, caused by the yen's depreciation. Business investment remains flat. ( ) Investment is centered on the maintenance and renewal of equipment. Some companies postpone investment reflecting business downturn caused by the yen's depreciation and soaring fuel costs. The employment situation shows signs of improvement. ( ) Although it remains severe when compared with the national ratio, the effective ratio of job offers to applicants is on an improving trend, marking the record high since the reversion to Japan (in 1972). On the other hand, some respondents pointed out that the number of applicants is insufficient to meet the number of offers, and there are mismatches between the needs of recruiters and those of job seekers. There is still a sense of an insufficient number of non-regular employees in the wholesale and retail industries. Private consumption shows signs of improvement. ( ) The sales trend at department stores and supermarkets remained steady, exceeding the level of the same month in the previous year. Some respondents pointed out that the number of customers increased, but per-customer spending decreased. As for travel, the number of tourists remains steady, due mainly to the yen s depreciation and the geographical advantage of Okinawa, in addition to the effects of attracting customers due to the expansion of routes of low-cost carriers and the opening of New Ishigaki Airport. The number of tourists from overseas increased by 41.6% from the level of the same month in the previous year in July, due to an increase in the number of tourists from Taiwan, the Republic of Korea, Hong Kong, China, etc. The number of domestic and foreign tourists also marked a record high of 731,200 for August (up 3.6% year-on-year), thus, the number of tourists as a whole remains steady, exceeding the level of the same month in the previous year for the 23rd consecutive month since October We expected that a reactionary decline caused by the consumption tax hike (April 1) would recover after July. The result is that a recovery from the reactionary decline is slower than we expected. This situation is not only for Okinawa, but also nationwide. It is the summer gift campaign season from July to September, but sales fell short of our forecast. (Small- and medium-sized transport business) - We respond to business downturn caused by the depreciation of the yen and soaring fuel costs by postponing business investment excluding that for emergencies. (Small- and medium-sized food manufacturer) - We have continued to recruit non-regular employees since the previous year, but the number of applicants is insufficient to meet the number of offers. We have never experienced this before. There may be mismatch in working hours and because the employees work in the plant operating 24 hours per day. (Small- and medium-sized food manufacturer) - Sales to foreign tourists are brisk for all kinds of daily necessities, cosmetics, specific medical supplies, and especially thermos bottles recently. Rice is also in high demand. (Large retailer)