August 2, 2023
Bank of Japan
Japan's Economy and Monetary Policy
Speech at a Meeting with Local Leaders in Chiba
UCHIDA Shinichi
Deputy Governor of the Bank of Japan
Introduction
It is my pleasure to have the opportunity today to exchange views with leaders in
administrative, economic, and financial areas in Chiba Prefecture. I would like to take this
chance to express my sincere gratitude for your cooperation with the activities of the Bank
of Japan.
Today, I will explain Japan's economic activity and prices, as well as the Bank's conduct of
monetary policy.
I. Current Situation of and Outlook for Economic Activity
I will start by talking about Japan's economic developments.
Japan's economy has recovered
Economic activity in both the household and corporate sectors has improved
moderately.
steadily, as demand, i.e., demand that had been suppressed during the pandemic,
pent-up
has materialized. Japan's economy is likely to continue recovering moderately, supported
for the time being by demand and subsequently by increases in wages and corporate
pent-up
profits.
In the Bank's Outlook for Economic Activity and Prices (Outlook Report) released
last week, it is projected that the economic growth rates will be in the range of 1.0-1.5
percent for fiscal 2023 and 2024 and around 1 percent for fiscal 2025 (Chart 1).
In what follows, I will explain developments in the household and corporate sectors. First,
regarding the household sector, private consumption has increased steadily at a moderate
pace, mainly for services such as accommodations as well as eating and drinking, as
demand has materialized due in part to the reclassification of under the
pent-up COVID-19
Infectious Disease Control Law (Chart 2). Recovery in inbound tourism demand has also
been a tailwind for the services industry.
face-to-face
In addition to demand, what underpins the increase in private consumption is
pent-up
growing expectations for improvement in household income.
The wage growth rate agreed
marked its highest level
in the annual spring labor-management wage negotiations this year
in three decades, including the base pay increase (Chart 3). Until around early 2023, there
were many who argued that, even if large firms were able to raise wages, it would be
difficult for local small and firms to do the same. However, concerns over the
medium-sized
possibility of being unable to hire and retain employees without raising wages trumped that
assumption, and wage increases were seen across a wide range of firm sizes. Obviously, this
was attributable to severe labor shortages. Over the past decade, the rate of
year-on-year
change in employee income has remained at around percent (Chart 4). Prior to the
2-3
pandemic, the increase was driven by a rise in the number of employees. With the outbreak
of the pandemic, however, the increase for the past two years or so has been led
COVID-19
by a rise in wages, given the limited
room for additional labor supply of women and seniors.
The wage increases this spring, of course, partly reflect last year's price rises, but are also a
result of overall labor market conditions. My assessment is that the basic structure of the
labor market will be unchanged next year and beyond. This means that firms will continue
to hold concern over labor shortages, but from the perspective of labor market conditions,
the environment where wages are likely to increase will continue.
That said, private consumption has been affected by higher prices. For example, some
supermarkets have pointed out that an increasing number of households have become
defensive in their spending, as seen in a decline in the number of items purchased and a
shift to products. This spending behavior is particularly evident for food and
lower-end
daily necessities, and consumption of these goods and other nondurable goods has been
somewhat weak (Chart 5 [left chart]).
Even with higher prices, various confidence indicators related to private consumption have
been improving to date, supported by an improving trend in employment and wage
conditions (Chart 5 [right chart]). Regarding the outlook, it is necessary to carefully
examine the balance among wages, prices, and private consumption, with particular focus
on (1) whether wages will continue to increase sufficiently relative to prices, which have
increased by more than expected, (2) whether such wage increases will be able to support
private consumption in a sustained manner, and (3) whether this will then lead to sustained
wage increases next year and beyond.
Turning to developments in the corporate sector, with central banks having rapidly raised
their policy interest rates to contain inflation, the pace of recovery in overseas economies
has slowed. Although Japan's exports and production have been affected by such
developments in overseas economies, they have been more or less flat, mainly supported by
a waning of the effects of supply-side constraints, such as on semiconductors used in
automobiles. Meanwhile, corporate profits have been at high levels, and in this
situation,
business fixed investment has continued to increase moderately (Chart 6). Investment is
projected to increase steadily in a wide range of areas, including investment to address labor
shortages, investment in digitalization, investment to address climate change, and research
and development (R&D) investment.
The largest risk to the outlook for the corporate sector is developments in overseas
economies. The main scenario is that overseas economies will achieve a soft landing, where
inflation rates around the world will gradually decline due to the effects of policy interest
rate hikes and the economies will move toward a stable growth path without significant
turmoil. That said, risks are significantly skewed to the downside; for example, there
remains the risk of inflation rates staying elevated through wage increases, and financial
conditions could tighten further through the financial system and the financial and capital
markets. In March 2023, there were phases when problems in the financial system were of
concern, triggered by the failure of Silicon Valley Bank (SVB) in the United States.
Thereafter, such concern has eased as many have come to understand that failed banks were
outliers that had unique business models, and because financial authorities responded
swiftly to the failures. That said, given the rapid pace of policy interest rate hikes to date in
the United States, it is inevitable that the impact of the rate hikes on the real economy and
finance entails uncertainty. Regarding the Chinese economy, while progress toward the
normalization of economic activity has been seen, the economy is experiencing a slowdown
in its pace of due to the impact of global adjustments in the IT sector and prolonged
pick-up
adjustments in the real estate market. The employment and income situation has also been
slow to recover, with attention being given to a high youth unemployment rate, for example,
and recovery in private consumption has been somewhat weaker than was widely projected,
despite the lifting of restrictions. There are significant uncertainties over
pandemic-related
the pace of in the Chinese economy ahead. It is necessary to pay due attention to
pick-up
the impact of these risks surrounding overseas economies on Japan's economic activity and
prices, including on developments in financial and foreign exchange markets.
II. Current Situation of and Outlook for Prices
Next, let me talk about price developments. The latest figure for the year-on-year rate of
increase in the consumer price index (CPI) for all items less fresh food was for June, at 3.3
percent (Chart 7). Looking at the breakdown, an increase in goods prices, such as food and
daily necessities, has made a significant contribution, suggesting the large effects of a
to consumer prices of cost increases led by a rise in import prices. On this
pass-through
point, import prices peaked around the middle of last year and the rate of
year-on-year
change has been negative recently. As this will have an impact with a certain time lag, the
rate of increase in the CPI is also likely to decelerate. Thereafter, it is projected to accelerate
again moderately as Japan's economy continues to recover, the output gap improves, firms'
and behavior changes, and wage growth and people's to
wage- price-setting medium-
inflation expectations rise. In the Outlook Report, the rate of change
long-term year-on-year
in the CPI is projected to be 2.5 percent for fiscal 2023, 1.9 percent for fiscal 2024, and 1.6
percent for fiscal 2025 (Chart 8). There are extremely high uncertainties over the outlook
for prices, including developments in overseas economic activity and prices, developments
in commodity prices, and domestic firms' and behavior. The Bank's
wage- price-setting
assessment is that sustainable and stable achievement of the price stability target of 2
percent has not yet come in sight.
The CPI forecast for fiscal 2023 in the July Outlook Report has been revised significantly
upward from the previous forecast in April. This revision reflects the fact that the CPI data
obtained around the turn of the fiscal year and anecdotal evidence were stronger than earlier
anticipated. The important factor to consider here is the background to the strong readings
and evidence. It was initially projected that inflation due to factors, where goods
cost-push
prices mainly increased, would fade, and thereafter prices would rise again in reflection of
gradual changes in firms' and behavior and the subsequent rise in
wage- price-setting
services prices, accompanied by wage increases. Identifying the causes of the recent
inflation is extremely important but difficult. Two hypotheses can be
higher-than-expected
proposed here: (1) the effects of factors are lasting longer than expected, and (2)
cost-push
firms' and behavior is changing somewhat earlier than anticipated.
wage- price-setting
As mentioned earlier, until now, the rise in goods prices has been the main driver of the
upswing in prices. Services for which prices have risen notably are those that use imported
raw materials, such as and home renovation (Chart 9). These developments are
dining-out
in line with the first hypothesis that, because the price of a wide range of imported goods
has risen significantly to date, greater pass-through of cost increases may have taken place
over a longer period than before. On the other hand, one highly plausible explanation
regarding corporate strategies is that firms may have started to consider setting prices in
view of potential future wage hikes, mainly on the back of results of
higher-than-expected
this year's annual spring wage negotiations and a rise in hourly wages of
labor-management
workers. In addition, goods prices are partly affected by wage increases because
part-time
many workers are involved in the supply chain, such as in the distribution process or at
retail stores. These aspects support the hypothesis that firms' behavior might be changing
earlier than expected.
Of course, neither hypothesis is 100 percent correct, and the answer probably lies
somewhere in between the two. My assessment at this point is that signs of change have
been seen in firms' and behavior. This may sound like an inconclusive
wage- price-setting
assessment, but since we are trying to determine the critical inflection point where firms'
behavior that took root during the period of deflation may change, it is necessary to
carefully assess the situation by scrutinizing information from a micro and a macro
perspective. In particular, in times of change such as the current one, it is important to
gather anecdotal information through the Bank's Head Office and branches; for example, by
exchanging views with those at firms at meetings like the one we are holding today.
III. The Bank's Conduct of Monetary Policy
The Basic Thinking on Monetary Policy
Next, I will explain the Bank's conduct of monetary policy. In its policy statement, the Bank
has made clear its basic thinking on the conduct of monetary policy that, "with extremely
high uncertainties surrounding economies and financial markets at home and abroad, the
Bank will patiently continue with monetary easing while nimbly responding to
developments in economic activity and prices as well as financial conditions. By doing so,
it will aim to achieve the price stability target of 2 percent in a sustainable and stable
manner, accompanied by wage increases."
The orthodox approach to conducting monetary policy is called the
risk-management
approach, which assesses both upside and downside risks and weighs the costs associated
with each of the risks. With this approach in mind, the Bank assesses that the downside risk
of missing a chance to achieve the 2 percent target due to a hasty revision to monetary
easing currently outweighs the upside risk of the inflation rate continuing to exceed 2
percent if monetary tightening falls behind the curve.
As previously mentioned, signs of change have been seen in firms' and
wage- price-setting
behavior. This could cause higher inflation than anticipated. However, even if inflation were
to be somewhat higher in Japan, it is very unlikely that wage increases and a consequent
additional rise in prices will be as significant as in the United States and Europe.
Accordingly, although those economies have been experiencing inflation above 2 percent, it
is unlikely that this also will be the case in Japan. Therefore, the Bank needs to patiently
continue with monetary easing in the current phase and support Japan's economy so that
wages continue to rise steadily next year.
If firms' behavior that took root during the period of deflation is starting to change, that is
the change that Japan's economy has long been waiting for. During the period of deflation, a
cautious stance was widely observed among firms. Concerned about the possibility of
losing customers to their competitors if they were the only ones to raise prices, firms kept
prices unchanged, secured profits by cutting costs, and thus were cautious about raising
wages. This stance became so deeply entrenched and was difficult to change even after
Japan's economy achieved a situation where it was no longer in deflation.
But today, although the initial trigger was a rise in import prices, firms are developing more
strategies for setting prices. In response to labor shortages, they are also
forward-looking
concerned with being unable to hire employees without raising wages and are now racing to
recruit them. While this mindset and behavior is inherent in the economy and supports
economic dynamism, it lost strength with the collapse of the bubble economy and during
the period of deflation thereafter. I have met with many corporate executives, and their view
seems to be that firms' behavior from the period of deflation should change and that they
would work on changing it if the situation allows. Although we are only seeing signs of
change in their behavior, this might be the chance to finally change Japan's economy.
Therefore, the Bank will patiently continue with monetary easing to carefully nurture these
signs.
Continuation and Conduct of Quantitative and Qualitative Monetary Easing (QQE) with
Yield Curve Control
I will now dive into slightly technical aspects of specific policy measures. Currently, the
Bank is pursuing monetary easing under the framework of yield curve control, in which the
policy interest rate is set at minus 0.1 percent, the target level of
short-term 10-year
Japanese government bond (JGB) yields is around zero percent, and the range of
10-year
JGB yield fluctuations is around plus and minus 0.5 percentage points from the target level
(Chart 10). I will focus on three points regarding this monetary policy.
First, the policy interest rate is decided and controlled solely by the Bank. If, in
short-term
the future, the Bank were to terminate its negative interest rate policy and apply, for
example, a zero interest rate, it would raise the policy interest rate by 0.1
short-term
percentage point. This decision will be made if the Bank assesses that it would be
appropriate to prevent price rises by suppressing demand in the real economy. Applying this
to the approach, by maintaining a negative interest rate of minus 0.1
risk-management
percent, the upside risk of the inflation rate continuing to exceed 2 percent if monetary
tightening falls behind the curve becomes a greater concern than the downside risk. Given
current developments in economic activity and prices in Japan, the Bank assesses that there
is still a long way to go before such decisions are made.
Second, in its policy statement, the Bank has made a commitment to continue with the
current framework of QQE with Yield Curve Control, aiming to achieve the price stability
target of 2 percent, as long as it is necessary for maintaining that target in a stable manner.
At this point in time, sustainable and stable achievement of the 2 percent target has not yet
come in sight. Therefore, the Bank will maintain the current framework in accordance with
its commitment.
Third, in conducting yield curve control under the current policy framework, the Bank has
been striking a balance between its positive effects and side effects from the viewpoint of
keeping in mind the impact on the functioning of financial intermediation and the market
while continuing with monetary easing in a sustained manner.
Every policy has its positive effects, but it also always comes with costs. There is no free
lunch for any policy. Given that the Bank is conducting monetary easing at such a large
scale, this has had positive effects, but at the same time, profits of financial institutions and
the functioning of financial intermediation have been affected (Chart 11). In addition,
controlling interest rates inevitably has had an impact on market functioning. The balance
between the positive effects and side effects changes depending on the situation, especially
on inflation expectations of people and market participants. While I will explain this in
detail later, when inflation expectations rise, not only the easing effects but also the side
effects strengthen. It is necessary to strike an optimum balance between the two.
In December 2022, the Bank modified the conduct of yield curve control by, for example,
expanding the range of JGB yield fluctuations from around plus and minus 0.25
10-year
percentage points to around plus and minus 0.5 percentage points from the target level. In
fact, given that in 2022, inflation rates abroad remained extremely high and the rate in Japan
also rose, inflation expectations increased for most of the year. As nominal interest rates
were unchanged, a rise in inflation expectations lowered real interest rates and strengthened
the effects of monetary easing. However, the Bank contained the rise in market interest rates
that reflected the increase in inflation expectations, and the side effects of monetary easing
on market functioning were large.
Just before the Bank modified the conduct of yield curve control at the end of 2022, it
purchased a large amount of JGBs in order to avoid the yields exceeding 0.25
10-year
percent, and its holding of the bonds reached 100 percent. As a result, JGB yields
10-year
were contained at 0.25 percent, but distortions were seen in the relationship between those
yields and yields on JGBs with other maturities. In the corporate bond market, the distorted
JGB yields could not be used as a benchmark and yield spreads between corporate bonds
and JGBs widened unnaturally (Chart 12). Forcibly capping JGB yields at 0.25
10-year
percent had undermined the intended effects of monetary easing on firms. In order to
patiently continue with monetary easing, the modification was necessary.
About half a year has passed since the modification of the conduct of yield curve control.
Given the changes in the economic and price situation in the meantime, the Bank decided at
the Monetary Policy Meeting held last week to conduct yield curve control with greater
flexibility. Specifically, the Bank will continue to allow JGB yields to fluctuate in
10-year
the range of around plus and minus 0.5 percentage points from the target level while
regarding the upper and lower bounds of the range as references, not as rigid limits, in its
market operations. Accordingly, it will allow the yields to move beyond the range
depending on market conditions. However, at 1.0 percent, purchase operations for
fixed-rate
consecutive days, through which the Bank purchases an unlimited amount of JGBs at fixed
rates, will be conducted to strictly contain the rise in interest rates. When the rates are
between 0.5 percent and 1.0 percent, the Bank will contain an excessive rise in the rates by
making nimble responses through, for example, increasing the amount of JGB purchases
and conducting purchase operations for nonconsecutive days and the
fixed-rate
Operations against Pooled Collateral, depending on factors such as the
Funds-Supplying
levels and the pace of change in interest rates (Chart 13).
long-term
Despite facing some twists and turns since the Bank modified the conduct of yield curve
control last December, the shape of the yield curve has been smooth and the functioning of
the corporate bond market has recovered (Chart 12). At this point, side effects, such as
distortions on the yield curve, are not as evident as last December. However, as mentioned
earlier, there are extremely high uncertainties surrounding economic and price
developments at home and abroad, involving both upside and downside risks.
Regarding upside risks, as wages and prices have both increased by more than anticipated
and signs of change have been seen in firms' and behavior this spring,
wage- price-setting
inflation expectations have shown some upward movements again. If these developments
continue and the Bank tries to strictly cap JGB yields at 0.5 percent, problems may
10-year
arise. For instance, bond markets could become distorted, and volatility in other financial
markets, including foreign exchange markets, could be affected. As was the case around
December 2022 when the Bank modified the conduct of yield curve control, in the face of a
rise in long-term interest rates, the potential side effects of strictly capping 10-year JGB
yields by conducting purchase operations for consecutive days at 0.5 percent
fixed-rate --
the strongest policy tool are too large, even when considering the balance with the easing
--
effects. The Bank therefore decided at this stage to adopt a measure in advance that would
mitigate the potential side effects. In other words, the aim of this policy decision is to be
prepared for any possible changes in the economic and price conditions, such as
inflation, so that the Bank can continue with monetary easing without
higher-than-expected
causing confusion.
Downside risks are also significant, especially with regard to overseas economies. Even if
they materialize, the Bank will continue to not strictly respond to the lower bound of the
range of JGB yield fluctuations under yield curve control. Therefore,
10-year long-term
interest rates will naturally decline and the effects of monetary easing will be maintained.
Of course, when the Bank should modify its policies depends on the situation at that time
because, while it is possible to maximize the easing effects by keeping the policy
unchanged until the last minute, settling the situation once a problem arises is more difficult
than addressing it in advance. Given that the modification of yield curve control in
December 2022 had created expectations in the bond markets that the Bank would
eventually make responses if problems arose, the Bank deemed it appropriate to decide to
conduct yield curve control with greater flexibility at the July Monetary Policy Meeting.
In sum, the Bank's decision to conduct yield curve control with greater flexibility aims at
patiently continuing with monetary easing while nimbly responding to both upside and
downside risks under extremely high uncertainties for economic activity and prices at home
and abroad. Needless to say, we do not have an exit from monetary easing in mind.
In order to make this point clear, my earlier explanation on the Bank's monetary policy
today was divided into three parts. Although there is no clear definition of an exit from
monetary easing, an exit should be considered in relation to the achievement of the price
stability target in any discussion. In other words, it is related to the first and second points;
namely, the decisions regarding whether to continue with the negative interest rate policy or
maintain the framework of QQE with Yield Curve Control. Given that sustainable and
stable achievement of the price stability target of 2 percent has not yet come in sight, there
is still a long way to go before the Bank can make changes to these decisions. In contrast,
the third point the conduct of yield curve control under the current policy framework is
-- --
a different type of challenge than the first and second ones because, given the characteristics
of the framework, adjustments are required in order to continue with monetary easing.
Patiently continuing with such easing is of the upmost importance for now, and to this end
the Bank will conduct yield curve control with greater flexibility.
Conducting the Monetary Policy Review from a Broad Perspective
To conclude my talk on monetary policy conduct, I would like to say a few words about the
review of monetary policy from a broad perspective that the Bank is currently conducting
(Chart 14).
The Bank decided to conduct a review from a broad perspective in April 2023 and has been
carrying out assessments of Japan's economic developments and monetary policy over the
past 25 years. In the late 1990s, Japan's economy fell into deflation, and monetary
accommodation did not produce sufficient stimulative effects even when interest
short-term
rates were lowered to 0 percent. Since then, the Bank has continued with unconventional
monetary policy, which goes beyond the scope of conventional policy. The unconventional
policy has had not only positive effects but also side effects, and the Bank will assess the
policy measures objectively and reasonably in its review. A crucial point in conducting the
review is not to assess the monetary policy measures alone but to evaluate them in the
context of interactions with Japan's economic conditions at each point in time. In this sense,
today's meeting is a valuable opportunity to hear your candid opinions on Japan's economic
activity and prices and the Bank's conduct of monetary policy.
IV. Recent and Future Economic Activity in Chiba Prefecture
Lastly, I would like to talk about the economy of Chiba Prefecture. The prefecture has been
pursuing a range of strategic actions to address economic and social
forward-looking,
changes, such as the shift to carbon neutrality, as well as digitalization and population
decline. For example, Chiba Prefecture has set guidelines for promoting carbon neutrality,
while firms such as those in steel and chemical industries gathered in the Keiyo Industrial
Zone have been vigorously pursuing technological development aimed at lowering carbon
dioxide (CO2) emissions and capturing CO2. Furthermore, efforts are underway to introduce
offshore wind power generation off the coasts of Choshi, Isumi, and Kujukuri.
Although Chiba Prefecture's population had continued to increase for many years, it turned
to a decline after peaking in 2020. To address this situation, the prefecture is currently
promoting various initiatives under a comprehensive strategy for regional revitalization,
which include boosting productivity through the use of artificial intelligence (AI) and other
technologies, supporting childcare, and enhancing the framework for providing
cutting-edge
health care. The hope is that the prefecture will take a leading role in addressing a major
issue facing Japan; namely, the establishment of a sustainable regional community.
In recent years, Chiba Prefecture has been struck by a string of natural disasters, such as
typhoons and earthquakes. In particular, Typhoons No. 15 and No. 19 in 2019 wreaked
massive damage on the region. Nevertheless, I still recall vividly how economic activity in
the prefecture was quickly restored thanks to the efforts of countless stakeholders and
financial institutions. I would like to express my respect for your efforts to ensure the
region's economic and financial resilience.
This year marks the 150th anniversary of the birth of Chiba Prefecture. Let me conclude by
offering my congratulations and hope that its economy will continue to flourish. Thank you
very much for your attention.
Japan's Economy and Monetary Policy
Speech at a Meeting with Local Leaders in Chiba
August 2, 2023
UCHIDA Shinichi
Deputy Governor of the Bank of Japan
Introduction
I. Current Situation of and Outlook for
Economic Activity
II. Current Situation of and Outlook for Prices
III. The Bank's Conduct of Monetary Policy
IV. Recent and Future Economic Activity in
Chiba Prefecture
The BOJ's Forecasts for Real GDP
(July 2023 Outlook Report)
s.a., ann., tril. yen
580
570
FY 2025
560
+1.0%
FY 2024
550
+1.2%
FY 2023
+1.3%
540
530
520
510
500
490
FY 13 14 15 16 17 18 19 20 21 22 23 24 25
Note: The forecasts presented are the medians of the Policy Board members' forecasts. The values of real GDP for fiscal 2023 onward are calculated by multiplying the actual figure for
fiscal 2022 by all successive projected growth rates for each year.
Sources: Cabinet Office; Bank of Japan.
1
Chart 2
I. Current Situation of and Outlook for Economic Activity
Private Consumption
s.a., CY 2019 = 100
110
105
100
95
90
85
80
75
Total real private consumption
70
Of which, services
65
60
CY 15 16 17 18 19 20 21 22 23
Note: Figures for total real private consumption are the real Consumption Activity Index (travel balance adjusted) based on staff calculations, which exclude inbound tourism consumption
and include outbound tourism consumption.
Source: Bank of Japan.
Results of Spring Wage Negotiations
Developments over Time
Results by Type of Employment
and Firm Size
y/y % chg.
8
CY 2022 CY 2023
total wage increase
Rate of wage increase +2.1% +3.6%
7
Base pay increase +0.6% +2.1% CY 2022 CY 2023
6
Regular employees
2.1% 3.6%
5
Base pay increase
1,000 or more
2.1% 3.7%
4
Regular wage increase
300 to 999
2.0% 3.4%
3
100 to 299
2.0% 3.3%
2
99 or less
1.9% 2.9%
1
Part-time employees
2.3% 5.0%
0
-1
80 83 86 89 92 95 98 01 04 07 10 13 16 19 22
CY
Notes: 1. In the left-hand chart, figures from 1980 to 2014 are those published by the Central Labour Relations Commission, while those from 2015 to 2023 are figures released by Rengo.
2. In the right-hand chart, figures for the breakdown by the number of regular employees are aggregated values based on the number of union members. Part-time employees include
fixed-term employees.
Sources: Japanese Trade Union Confederation (Rengo); Central Labour Relations Commission.
3
Chart 4
I. Current Situation of and Outlook for Economic Activity
Employee Income
y/y % chg.
4
3
2
1
0
-1
Nominal wages (total cash earnings)
Number of employees
-2
Employee income
-3
Real employee income
-4
CY 12 13 14 15 16 17 18 19 20 21 22 23
Notes: 1. Q1 = March-May, Q2 = June-August, Q3 = September-November, Q4 = December-February.
2. Employee income = Total cash earnings × Number of employees
(Monthly Labour Survey) (Labour Force Survey)
3. Figures from 2016/Q1 onward are based on continuing observations following the sample revisions of the Monthly Labour Survey.
4. Figures for real employee income are based on staff calculations using the CPI (less imputed rent).
Sources: Ministry of Health, Labour and Welfare; Ministry of Internal Affairs and Communications.
Private Consumption and Consumer Confidence
Confidence Indicators Related
Private Consumption by Type
to Private Consumption
s.a., CY 2019 = 100 s.a.
60
125
Services
120
50
115
Durable goods
110
Nondurable goods
40
105
100
95 30
Improved
90
20
85
Consumer Confidence Index
Worsened
80
Economy Watchers Survey
75 10
(household activity)
70
65 0
CY CY 19 20 21 22 23
19 20 21 22 23
Notes: 1. In the left-hand chart, figures are based on the real Consumption Activity Index.
2. In the right-hand chart, figures for the Economy Watchers Survey are those for the current economic conditions DI.
Sources: Bank of Japan; Cabinet Office.
5
Chart 6
I. Current Situation of and Outlook for Economic Activity
Business Fixed Investment Plans
Tankan Annual Survey of Corporate Behavior
y/y % chg.
y/y % chg. y/y % chg.
15