General Summary of Regional Economic and Industrial Research Results (from April to June 2015) (1/2) Reference 2

Transcription

1 Summary of Regional Economic and Industrial Research Results (from April to June 2015) (1/2) Reference 2 The overall assessment remains the same as that in the previous quarter. As for the assessments by region, those for Hokkaido, Tokai, and Kinki have been revised upward, and those for other regions remain the same as in the previous quarter. Production: In the automobile and automobile-related industries, production remains steady in Hokkaido, Kanto, Tokai, and Kyushu mostly because of exports to North America. Meanwhile, domestic demand continues to be in a weak state due to the effects of the light motor vehicle tax hike and other factors. Production in the electronic parts and devices industry remains steady in Kanto, Hokuriku, Kinki, Chugoku, and Kyushu because of smartphones and automobiles for export. Moreover, production in the generalpurpose, manufacturing, and business-oriented machinery industries have also remained steady in Hokkaido, Kanto, and Tokai mainly because of exports. Business investment: In the 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 factory construction. In non-manufacturing industries, movements in opening new stores and remodeling existing stores have continued to be seen nationwide in the retail industry, while some retailers in Tohoku, Kanto, and Kyushu responded that they are concerned about the effects of the severe business environment, soaring construction costs, and a decrease in suitable available properties on their plans to open new stores.

2 Summary of Regional Economic and Industrial Research Results (from April to June 2015) (2/2) Employment situation: In the manufacturing industries, although some companies have secured an appropriate number of employees, some other companies continued to face a labor shortage from the previous quarter, compensating for increases in production and orders through overtime work by employees, for example. Also in non-manufacturing industries, a labor shortage continues in the retail, services, and construction industries on a nationwide basis, and some respondents stated the situation will continue in the future. Private consumption: Although sales of food at supermarkets remain steady and sales of luxury goods at department stores are recovering nationwide, budget-minded attitudes still persist for daily necessities. Although a recovery from the effects of the reactionary decline after the last-minute increased demand preceding the consumption tax hike has been seen in sales of home appliances, the effects of the reactionary decline after the last-minute increased demand preceding the light motor vehicle tax hike have been seen in sales of automobiles. As for tourism, some respondents pointed out that consumption by foreign tourists is brisk in Hokkaido, Kanto, Tokai, Kinki, Kyushu, and Okinawa, and the effects of the opening of the Hokuriku Shinkansen have been seen.

3 Description of sector-specific (major comments) Hokkaido Picking up moderately while there are some weak movements Production shows some weak movements. Overseas demand remains steady in the transport equipment and general machinery industries. As for metal products, the production of building materials for Hokkaido is starting to show weakness due to a decline in public works and large-scale private construction, while the production of some building materials for Honshu remains steady. In the electrical machinery industry, although some companies are working on the development of new products and the enhancement of manufacturing equipment, production is making little progress due to global price competition. In the pulp and paper and food industries, the soaring prices of raw materials are influencing earnings. Business investment shows signs of picking up. With progress in investment for production capacity enhancements in manufacturing industries including the food, electrical machinery, and transport equipment industries and additional aggressive investment for opening new stores by retail stores in non-manufacturing industries, companies show positive attitudes toward investment as a whole. Employment is moderately improving. The effective ratio of job offers to applicants has been on an upward trend over the long term, although it is at a lower level compared with the national ratio. Meanwhile, mismatches continue to arise between job-seekers and available jobs; the numbers of technical workers in factories in the manufacturing industries and that of salespersons and information technology engineers in the non-manufacturing industries are insufficient. Private consumption is picking up although there are some weak movements. Although there are differences between stores, sales at large-scale retail stores increased significantly from the level of the same month in the previous year and achieved the level of the same month in the year before the previous year, due to good weather in addition to the reactionary decline in sales right after the consumption tax hike in the previous year. Sales of fresh foods remain steady at supermarkets, and those of luxury goods including jewelry and expensive watches are growing at department stores. Sales of large home appliances and televisions are recovering at last despite the reactionary decline after the last-minute increased demand preceding the consumption tax hike. Although sales of real estate are ceasing to fall, new car sales showed a reactionary decline after the last-minute increased demand preceding the light motor vehicle tax hike from April and have shown weak movements. Sales in tourism are briskly increasing mainly due to tourists from overseas, and hotel-occupancy rates and consumption are also increasing. Although production of electronic parts for smartphones is increasing, sales are in a severe situation due to international price competition. (Large manufacturer) Both the prices and quantities of fresh foods are steady. As for processed foods, we set prices flexibly focusing on some segments without too much concern about competition. (Large supermarket) Sales of duty-free items are brisk amid the softening of the effects of the consumption tax hike, and we will continue to open new stores and remodel stores aggressively in the future. (Large specialized retail store) We raise basic wages regardless of business every year. We will also raise bonuses as a way of passing on the benefits of the improvement in business in the present quarter. (Small- and medium-sized manufacturer)

4 Tohoku Showing some weak movement while on a moderate recovery trend Description of sector-specific (major comments) Production remains flat although there are some weak movements. Production in the electronic devices and general machinery industries, which has been supported by brisk exports mainly of products for use in automobiles and products for smartphones, has come to a pause and remains flat. Production declined in many industries such as the information and communications equipment industry, in which the production of core products had peaked out, as well as the transport equipment and chemical and petroleum industries. As for future prospects, although there is an increase in companies which expect to increase production due to the start of new products and new orders, some companies expect the severe situation to continue due to stagnant domestic markets. There are some concerns about decline overseas such as the stagnation of the Chinese economy. Business investment is moderately picking up. In the manufacturing industries, there are more companies that have increased investment compared with the previous year as new orders are received, with subsequent investment for increased production capacity reflecting favorable business, although some companies have decreased investment as a reaction to large-scale investment in the previous fiscal year. In non-manufacturing industries, although there are some concerns about a decrease in suitable available properties and a rise in construction costs, retailers continue to show proactive attitudes toward opening new stores, and many companies have increased investment. The largest category of investment is for maintenance and renewal of equipment, followed by responses to production increases and new orders, and streamlining and labor cost reductions. The employment situation continues to improve. The employment situation continues to improve with the ratio of job offers to applicants remaining at a high level partly because it is being supported by demand resulting from reconstruction and recovery. Although many respondents pointed out that the employment situation mostly remains at an appropriate level in each industry, some respondents pointed out that it is difficult to secure human resources such as engineers in the construction industry and part-time workers in the retail and manufacturing industries. In coastal areas in disaster-affected prefectures, a noticeable mismatch between job-seekers and available jobs is causing the severe situation to continue. As for the results of the recruitment of new graduates in FY 2015, there are also some concerns that job-seekers will decrease in the retail and lodging industries in the next fiscal year although more companies hired more new graduates compared with the previous year. Private consumption shows signs of moderate recovery. Sales at large-scale retail stores are on a moderate recovery trend because food and beverage sales continue to remain steady, and luxury goods including personal goods, which have been sluggish, are showing movements. Although summer clothing and cold foods and beverages showed movements due to the increased air temperature, some respondents pointed out that it didn t mean that they had achieved a full-scale recovery because consumer attitudes toward lower prices and money-saving persisted. As for future prospects, although there are some concerns about cautious consumer activity due to a rise in the prices of goods, there are some expectations that consumption will recover due to the effects of the improvement of the employment and income environment and premium gift certificates. We expected to increase sales mainly to the Republic of Korea and Taiwan at the beginning, but orders are unfavorable now. (Large manufacturer / Iwate Prefecture) There is movement in the sales of luxury goods such as jewelry. But, although there is a sense of recovery centered on demand from the high income bracket, we do not feel that the sales of core clothing items are recovering. (Large retailer / Miyagi Prefecture) We cannot gain the support of our employees unless we raise their wages because of the decrease in real wages due to price hikes and the increase in the prices of our products.

5 Kanto Recovering moderately Description of sector-specific (major comments) Production shows signs of moderate recovery. Although the transport equipment industry faces a severe situation with respect to domestic sales, overseas demand such as in North America remains brisk. The demand for electronic parts for smartphones is steady. In the general machinery industry, orders of machine tools are steady; domestic orders have increased due to the effects of policy measures supporting domestic business investment, and overseas production for smartphones in China and orders for automobiles and aircraft in North America remain brisk. In the steel industry, inventory remains high due to a decline in domestic demand, and the inventory has been adjusted. Business investment is moderately recovering. In the manufacturing industries, many SMEs indicated they are investing in production equipment enhancement because of an increase in demand and business investment in growth fields. Some companies are postponing business investment partly due to uncertainties about the future. In the non-manufacturing industries, although there are many companies that have invested for business expansion and plans for the opening of new stores, some companies have slowed the pace of the new store openings due to problems including problems in securing land, and also some companies have been selecting business investments carefully due to the severe business environment. Employment is improving. There is a sense of a labor shortage in many manufacturing industries, and also there are movements toward increasing the number of employees in response to the labor shortage at production sites. In non-manufacturing industries, there is a sense of insufficient numbers of engineers at construction sites and salespersons at stores in the retail industry, and there are strong concerns that the situation will continue in the future. In particular, the recruitment of new graduates and young people cannot secure human resources because of the improvement in the employment situation. There are also some movements toward the use of the elderly and personnel adjustment inside companies. Private consumption is recovering. While purchases in the premium market segments do not show any recovery, sales are steady because of support from the sales of luxury goods and duty-free items. In automobile sales, the effects of the reactionary decline after the last-minute increased demand preceding the consumption tax hike in the previous year remain. Sales at convenience stores have exceeded those in the previous year, and movements were seen particularly in sales of seasonal goods at electronics mass retail stores due to favorable weather. Domestic travel continues to be brisk partly due to the effects of the yen s depreciation, and demand from foreign visitors is also on an upward trend. Consumption is slow despite the tendency of people to favor high prices and high-quality merchandise in terms of essential daily goods and restaurants. Overall, no strength has been seen in consumer spending. The effects of the policies on government subsidies for mid-ranking companies and SMEs to promote business investment continue to be seen. (Large manufacturer / Tokyo) We are considering installing production equipment in response to an increase in production. (Small-and medium-sized manufacturer / Yamanashi Prefecture) We raised wages mainly for young people, for whom wages had been pushed down. (Small- and medium-sized manufacturer / Saitama Prefecture) Although aspects of the sales of tax-free items in the metropolitan area vary significantly between the Ginza area and rest of the metropolitan area, sales are now three times those in the previous year. (Large retailer / Tokyo)

6 Chubu (Tokai) Improving moderately Description of sector-specific (major comments) Production sees strong and weak periods. Production in the electronic parts and devices industry, which has continued to increase, is at a high level; however, it remains flat mainly for smartphones. Automobile-related industries, which are the core businesses in the region, remain flat as a whole, as domestic demand is in a weaker state while production for North America shows signs of picking up. In the steel industry, production for domestic automobiles mainly is in a weaker state. Production of metal-cutting machinery is moderately picking up in terms of domestic demand, in addition to steady demand from North America. Business investment is increasing. As for the manufacturing industries, although domestic investments mainly for streamlining and efficiency as well as maintenance and upgrading can be seen, investments for production capacity enhancement can also be seen in some portions of the motor vehicle parts and electronic parts and devices industries. As for overseas investment, investment activities for production capacity enhancement for North America and emerging countries are evident. As for non-manufacturing industries, in the retail industry such as department stores, supermarkets, and car dealers, there have been movements toward remodeling stores and other facilities. The employment situation is steadily improving. In the manufacturing industries, many respondents pointed out that an increase in production could be handled by the current number of non-regular workers. As for non-manufacturing industries, a sense of an insufficient number of non-regular employees has increased in the retail industry including in supermarkets and convenience stores, and a situation persists in which the number of applicants is insufficient to meet the number of offers. Some SMEs also pointed out that they wanted to recruit superior human resources but large companies are in a better position to recruit them. Private consumption is recovering moderately. Sales in luxury goods at department stores have a strong performance. Sales to foreign visitors to Japan have increased although the ratio of such sales to total sales is not very high. At supermarkets, sales of foods and beverages are steady partly due to a rise in the market prices of fresh foods. In automobile sales, although sales of light motor vehicles show the effects of the reexamination of auto body taxation, a decrease in the influence of the reactionary decline after the lastminute increased demand preceding the consumption tax hike in the previous year, which has been mitigated by the annual cycle, has been seen. Sales of home appliances exceed the levels of the previous year, mostly influenced by sales of large home appliances and seasonal home appliances such as air conditioners, due to a decrease in the influence of the reactionary decline after the last-minute increased demand preceding the consumption tax hike in the previous year, which has been mitigated by the annual cycle. Housing investment shows signs of a leveling off of the effects of the reactionary decline after the last-minute increased demand preceding the consumption tax hike. Domestic demand for automobile parts continues to be in a weaker state although it is better than originally expected. Sales in North America are brisk. We raised wages (including basic wage increases, bonus increases, and annual pay increases) as a way of passing on the benefits of good to employees. (Large automobile parts manufacturer / Aichi Prefecture) We worked on activities for new sales promotions because we expected a decrease in domestic orders, and, as a result, sales exceeded the level of the previous year. We raised wages to strengthen the motivation of our employees. As applicants for new jobs decrease, we want to reconsider our recruitment methods to get the best human resources. (Small- and medium-sized cast and forged product manufacturer / Aichi Prefecture) Sales of foods and beverages were steady and contributed to our total sales partially because of a rise in the market prices of fresh foods. The difficulties in securing part-time workers continue even when wages are raised. (Large supermarket / Aichi Prefecture) Consumer confidence in purchasing automobiles is recovering to the level of that before the consumption tax hike, reflecting improvements in and increases in wages at large manufacturers. (Large automobile retailer / Aichi Prefecture)

7 Description of sector-specific (major comments) Chubu (Hokuriku) Improving moderately Production remains at a high level. Production in the electronic parts and devices industry is brisk for both smartphones for overseas and automobiles. Production in the chemical industry, mainly of medicines, is brisk. In the general-purpose, manufacturing, and business-oriented machinery industries, although production of machine tools is increasing mainly due to overseas demand, the production of machinery including construction machinery is showing stagnation. In the textile industry, overseas demand for high-density fabrics is brisk although demand for domestic clothing is sluggish. In production in the metal products industry, especially in the manufacture of sliding window frames for homes, a reactionary decline after the last-minute increased demand preceding the consumption tax hike continues. Business investment remains at a high level. In the manufacturing industries, although companies are investing domestically for R&D for new products and equipment upgrades for productivity improvement and labor cost reductions, some companies have finished the construction of large plants. As for overseas investment, movements in setting up and adding plants in response to increased demand in relevant countries continue to be seen. In non-manufacturing industries, although massive investment toward the opening of the Hokuriku Shinkansen has settled, investment for establishing new retail locations and remodeling current stores continues to progress. The employment situation is improving. In the manufacturing industries, although companies with increasing production have responded to the increase in production through raising the number of non-regular employees, including temporary staff, and increasing overtime and holiday work by employees, some companies have finished preparing for production increases. Investment for labor cost reductions has also progressed. In non-manufacturing industries, although job offers continue to be made, the sense of a labor shortage has become even stronger due to the opening of a series of new stores in large commercial buildings. Private consumption is picking up. At department stores, although sales, mainly of cosmetics and luxury goods, are increasing due to recovery from the reactionary decline after the last-minute increased demand preceding the consumption tax hike in the previous year, there has been a loss of local customers. However, there has been an increase in tourists due to the opening of the Hokuriku Shinkansen. At supermarkets, sales of core foods are brisk, partly due to the effects of a rise in market prices, and sales of housing-related items are also recovering. Although sales of automobiles show the effects of the light motor vehicle tax hike, sales of home appliances and real estate are picking up. Wages, sales and profit are flat. However, we raised starting salaries to secure the best human resources. (Large manufacturer / Toyama Prefecture) There is no move to bring production back to Japan in the manufacturing industries, and we think we need more overseas development. But, we are not thinking of reducing domestic production levels either. (Large manufacturer / Ishikawa Prefecture) Individual tourists are increasing: domestic tourists due to good weather and the effects of the opening of the Hokuriku Shinkansen, and overseas tourists due to the spread of the Internet. (Large tourism agency / Toyama Prefecture)

8 Kinki Improving moderately Description of sector-specific (major comments) Production shows signs of pausing amid moderate recovery. In the electronic parts and devices industry, demand for smartphones mainly in China, where communication networks are expanding, continues to remain brisk. In the general purpose, manufacturing, and business-oriented machinery industries, although exports mainly for North America remain steady, some respondents stated that exports for China are stagnant. Production of light motor vehicles in the transport equipment industry shows a decline, due to the effects of the reactionary decline after the last-minute increased demand preceding the light motor vehicle tax hike. Business investment is picking up. Investments for setting up and adding plants aiming for optimal local production continue to be made mainly by large manufacturers, and investment for production capacity enhancement has been observed. Small- and medium-sized manufacturers are interested in investment in energy saving measures and productivity improvement, and efforts have been seen in encouraging new business through the use of policy support. In non-manufacturing industries, there is evidence of a strong willingness to invest in opening new stores in the expectation of consumption by foreign visitors and the remodeling of facilities in the expectation of new demand, etc. The employment situation is improving. Although some respondents also stated that they had a surplus of employees depending on the departments and position, a labor shortage still continues on the whole. Movements toward hiring new employees have arisen among large companies. Meanwhile, many respondents pointed out that global human resources for overseas business, as well as the numbers of fully-qualified personnel and engineers, remain insufficient. Private consumption is improving moderately, although some businesses remain weak. Private consumption is picking up moderately on the whole although whether consumption goes up or down appears to depend on factors including the type of items, purchaser segments, and whether the sales are in suburbs or urban areas. At department stores, sales of luxury goods continue to be brisk, reflecting the rise in stock prices. Sales at supermarkets and other equivalent stores have tended to improve although inter-type competition is severe. Although sales of light motor vehicles are sluggish due to the effects of the light motor vehicle tax hike, in the home appliance industry, sales of mainly large home appliances appear to have recovered. As for travel, domestic travel remains steady although the number of overseas trips is decreasing due to the yen s depreciation and political uncertainty, and business at leisure facilities also remains brisk. Various respondents stated that consumption by foreign tourists continues to be brisk. We plan to increase business investments compared to the previous fiscal year for production capacity enhancement mainly for capacitors. (Large manufacturer / Kyoto Prefecture) Sales for domestic travel are brisk, and the cost per trip is increasing on the whole. (Lifestyle-related services / Osaka Prefecture) We raised wages to share the profits gained through the recovery of business with employees and to retain and secure employees. (Small- and medium-sized manufacturer / Fukui Prefecture)

9 Chugoku Picking up Description of sector-specific (major comments) Production remains flat. Production in the steel industry decreased slightly due to the effects of inventory adjustment. Production in the chemical industry decreased slightly due to periodic repairs of equipment in plants and a decrease in exports for Asia. Production in the automobile industry decreased slightly due to an increase in overseas local production and sluggish domestic demand for light motor vehicles. Production in the general-purpose, manufacturing, and business-oriented machinery industries increased slightly due to an increase in orders for some items. Production in the electronic parts and devices industry remains flat because demand from large companies for parts for smartphones in North America remains steady. Business investment is picking up. In the manufacturing industries, there is a positive trend toward increased orders and support for new products in addition to investment for the maintenance and renewal of existing equipment to support streamlining and energy saving. In non-manufacturing industries, continuous investment in opening new stores and improving management efficiency have been seen. The employment situation is steadily improving, with a sense that there is a labor shortage continuing in a wide range of industries. There is a shortage of human resources in technical fields in the manufacturing and construction industries and also an insufficient workforce in the sales field because of the opening of new stores and other activities in the retail industry. A sense of a labor shortage including a lack of necessary human resources continues in a wide range of industries. Private consumption remains flat. Sales of cosmetics, watches, and large home appliances increased against the reactionary decline after the last-minute increased demand preceding the consumption tax hike in the previous year. Sales of overseas luxury brands, which had struggled, also showed positive signs. Sales of seasonal goods are also brisk due to favorable weather. In automobile sales, although sales of standardsized and compact cars increased, sales of light motor vehicles are sluggish due to the reactionary decline after the last-minute increased demand preceding the light motor vehicle tax hike. Decreased production. Domestic production from April to June is expected to be at a low level due to the effects of inventory adjustment. (Large manufacturer / Hiroshima Prefecture) Slightly decreased production. Production of automobiles for the domestic and overseas markets is expected to decrease. (Large manufacturer / Hiroshima Prefecture) The opening of new stores in the service and restaurant industries is expected to increase slightly. (Financial institution / Tottori Prefecture) The number of welders, ironworkers, scaffolders, and painters is insufficient. (Small- and medium-sized shipbuilder / Hiroshima Prefecture) We actually feel that the situation is slowly picking up. We will increase sales by implementing unprecedented measures, for example, selling high-priced or premium items. Additionally, we continue to expect contributions from premium gift certificates. (Large home center / Tottori Prefecture) We raised basic wages and annual pay, aiming to retain and secure employees, because of the improvements in the terms and of job offers and the wage trends in other companies in the same industry. (Small- and medium-sized manufacturer / Hiroshima Prefecture)

10 Shikoku Showing signs of moderately picking up Description of sector-specific (major comments) Production shows a pause amid moderate recovery. In the electrical machinery industry, for the most part, a high level of production has continued due to the enhancement of overseas competitiveness, bolstered by the yen s depreciation. Production in the pulp, paper, and processed paper product industries, for which demand from foreign visitors is brisk, and production in the general-purpose and manufacturing machinery industries, for which demand from domestic construction is steady, show signs of picking up. Production in the textile and nonferrous metal industries remains almost flat. Production in the ceramic, stone, and clay, and steel industries shows some weak movements due to a decrease in domestic and overseas demand and other factors. Business investment shows signs of moderate recovery. Active investment is seen in some industries, including the electrical machinery and transport equipment (shipbuilding) industries, in which demand is brisk, as well as the nonferrous metal, pulp, paper, and processed paper product, and retail industries, for production equipment enhancement, R&D, new store openings, and other objectives in response to production increases and new orders, although business investment has been mainly for the maintenance and renewal of equipment partly due to uncertainties about the future. The employment situation is improving. The employment situation continues to improve; for example, more than half of the companies which responded to the survey believe that they have an appropriate number of employees. Despite this situation, a wide range of industries, including the food, electrical machinery, transport equipment (shipbuilding), retail, electrical work, housing sales, and construction industries, indicate that they have an insufficient or a slightly insufficient amount of employees and continue to feel a labor shortage. As for the future outlook, many industries and companies intend to increase their number of employees, which indicates a continuous increase in willingness to hire employees. Private consumption shows signs of picking up amid weak movements. Sales at department stores and supermarkets show signs of moderate recovery. Sales at convenience stores remain steady mainly due to a continuous increase in the number of stores. While home appliance sales show signs of picking up, automobile sales remain flat due to the effects of the revision of the tax system and other factors. If the exchange rate remains at the current level, we can expect to expand our business because of an increase in the number of business inquiries from overseas users, improving our business. (Large manufacturer / Tokushima Prefecture) As new graduates tend to go to larger companies, the securement of the necessary number of recruits is difficult. (Small- and medium-sized manufacturer / Ehime Prefecture) Consumer confidence is rising, reflecting high stock prices and favorable business, and the willingness to buy luxury goods is already high. We expect that premium gift certificates in the summer will be an opportunity to achieve real recovery in personal consumption. (Other retailer / Kagawa Prefecture) We set basic wages as a result of comprehensive consideration of various factors: improving employee motivation, reflection of performance evaluation, price hikes, and the trend toward improvement of wages in the industrial world. We raised bonuses (lump sums) due to brisk corporate performance. (Large manufacturer / Ehime Prefecture)

11 Lower performance is seen in domestic models of automobiles, and production is flat while sales of those for North America remain brisk. (Large manufacturer / Fukuoka Prefecture) We plan to make large investments in production equipment for semiconductors to meet the various demands of customers. (Large manufacturer / Kumamoto Prefecture) We raised the basic wages of all employees for the first time in 16 years to pass on the benefits of the improvement of our business to our employees. (Large manufacturer / Fukuoka Prefecture) We saw an increase in sales of what we offered, with an attractive selection of goods and intensive advertising, and consumer confidence is slightly increasing. (Large retailer / Kagoshima Prefecture) Region Kyushu Picking up moderately Description of sector-specific (major comments) Production is moderately picking up. In the transport equipment industry, although overseas orders for automobiles increased, domestic orders for automobiles decreased. Production in the shipbuilding industry remains brisk. In the electronic parts and devices industry, although demand for automobiles for overseas and domestic markets and demand for smartphones for overseas remain steady, some companies are experiencing severe situations. In the general-purpose, manufacturing, and business-oriented machinery industries, as for equipment related to air conditioning for Japan and for overseas, although production for Japan started to show signs of picking up, orders for maintenance of facilities related to power plants have decreased due to the reactionary decline from the previous year. In the electrical machinery industry, orders increased due to orders received from machinery-related companies that have a high export ratio reflecting the yen s depreciation, while the effects of the reactionary decline after the last-minute increased demand preceding the consumption tax hike in the previous year were partly seen. In the basic materials-related industries, orders increased due to recovering demand for remodeling in the housing market, in addition to demand for chemical raw materials for research reagents in North America and overseas demand for electronic parts for smartphones being brisk. In the food industry, demand is picking up as a whole, and in particular, demand for health products has also increased. Business investment is picking up. In the manufacturing industries, movements can be seen toward business investment for production increases and investment for technological development in the semiconductor, shipbuilding, and production machinery industries, and investment for cost reduction. Also, in non-manufacturing industries, some companies seem to be deferring the opening of new stores due to the soaring prices of building materials, while there are movements toward investment for remodeling stores, meeting demand from foreign visitors, and introducing equipment related to information systems. The employment situation is improving. Although manufacturers are eager to secure human resources, in the manufacturing industries, some manufacturers face severe situations in which the number of applicants is insufficient to meet the number of offers, with a rising effective ratio of job offers to applicants. Also, in nonmanufacturing industries, companies in a wide range of industries face a labor shortage, resulting in overtime work increasing for regular employees. Private consumption shows signs of picking up. At large-scale retail stores, although sales of luxury goods show positive performance due to factors such as an increase in inbound travel from overseas and a rise in domestic demand in addition to the reactionary decline after the last-minute increased demand preceding the consumption tax hike in the previous year, budget-minded attitudes for daily necessities continue. Sales in tourism and leisure-related sectors show steady domestic demand, while demand for spending overseas is sluggish mainly due to the yen s depreciation. In sales of home appliances, demand shows signs of picking up. Sales of automobiles are stagnant due to the effects of the tax hike in April and other factors. In housingrelated sectors, demand for condominiums in city centers remains steady although demand for single-family houses continues to underperform.

12 Description of sector-specific (major comments) Okinawa Improving Production shows signs of picking up. Production of food is increasing due to seasonal demand and other factors. Production of ceramic, stone, and clay products remains steady, due to public works and other factors. On the other hand, production increased due to construction work for a second runway at the Naha Airport and the extension of the Yui Rail, and some other respondents pointed out that private construction works including logistics facilities and condominiums have accelerated. Business investment remains flat. Business investment remains flat. Many respondents pointed out that they planned to conduct replacement or maintenance of machinery. Some respondents also pointed out that they would plan and conduct the relocation of their headquarters and the establishment of new facilities. In the wholesale and retail industries, many respondents pointed out that they would be expanding and remodeling facilities and stores. The employment situation shows signs of improvement. Although the employment situation remains severe compared with other regions in Japan, the effective ratio of job offers to applicants remains steady, and has reached a record level. However, a sense of insufficient numbers of regular and non-regular employees persists. Some respondents pointed out that the number of applicants had been insufficient to meet the number of offers when they had offered jobs for non-regular employees, however applicants increased sufficiently as soon as they changed the offers from being for non-regular employees to being for regular employees. Private consumption shows signs of improvement. The sales trends at department stores and supermarkets remain steady, exceeding the level of the same month in the previous year. Consumption by residents around each store is steady, supported by the current prosperity, and also foreign tourists have contributed to the sales of home appliances and consumer goods. Some respondents also pointed out that the start of the use of the Consumption Tax Exemption (Tax-free) Program resulted in an increase in per-customer spending. The number of tourists remains steady. In particular, the number of tourists from overseas exceeded 130,000 in April and May, reaching a record level in each month, and increased due to the expansion of airline routes, an increase in port calls by cruise ships, the effects of MERS, and other factors. Although the difference between the off-season and the on-season is an issue for tourism in Okinawa, some respondents also pointed out that the difference is being reduced every year through the efforts of industry actors. Production increased due to construction work for a second runway at the Naha Airport, the extension of the Yui Rail, and other factors. Private construction works including logistics facilities and condominiums have accelerated. (Small- and medium-sized manufacturer) The number of applicants has been insufficient to meet the number of offers when we had offered jobs for non-regular employees, however, applicants significantly increased the day after we changed the offers from being for non-regular employees to being for regular employees, and we hired more than 10 people. We think the tendency for people to favor stable employment and income as regular employees rather than non-regular employees has become stronger. (Large retailer) Airline routes have been expanded (an increase in the number of flights and runs of charter flights), and port calls by cruise ships increased. Trip destinations shifted from the Republic of Korea to Japan, due to the effects of MERS. Meanwhile, there were some trips which we couldn t offer because we couldn t secure hotels in the prefecture. (Large travel agency) We revised basic salaries in the previous fiscal year. Salaries have risen eight percent compared to those of three years ago. We raised salaries in response to the consumption tax hike as a matter of policy. We also plan to revise the basic salaries in the next fiscal year. We would like to raise the starting salaries for new graduates from universities. The purpose of raising salaries is to improve the treatment of our employees, keeping in mind the average wages in Japan and to increasingly motivate the employees. In particular, we plan to improve the quality of part-time workers. (Large retailer)