, and then examine the risks to the outlook, particularly regarding developments in overseas economies. to begin with, i will talk about economic developments in japan. the economy is expanding moderately, with a virtuous cycle from income to spending being maintained in both the corporate and household sectors. in order to grasp the overall picture of economic activity, let us first take a look at an indicator called the output gap, which represents the balance between demand and supply in the economy as a whole ( chart 2 ). while a positive output gap shows excess demand and a negative output gap indicates excess supply, the gap has been clearly positive over the past two years. under these circumstances, the current economic recovery phase, which began in december 2012, has already lasted for a long period of about six years, almost reaching the longest post - war recovery on record. next, let me explain developments by economic entity. in the corporate sector, exports and production have maintained their increasing trend ( chart 3 ). although they were pushed down by the successive natural disasters in the july - september quarter last year, such effects were only temporary, and exports and production have turned to an increase since october. in this situation, corporate profits have been at high levels and business fixed investment has continued on an increasing trend ( chart 4 ). looking at fixed investment by sector, in manufacturing, there has been a notable increase in research and development investment in cutting - edge technologies such as self - driving systems and artificial intelligence ( ai ), in addition to investment intended for enhancing capacity. in nonmanufacturing, investment also has been increasing in a wide range of fields, such as that in office buildings accompanying urban redevelopment projects and in the construction of accommodation facilities to meet demand from inbound tourism. investment aimed at improving efficiency and saving labor in order to deal with the recent labor shortage also has maintained its high growth nationwide. such improvement in the corporate sector has had positive effects on the household sector. in the labor market, the active job openings - to - applicants ratio has been at a high level last seen during the period of high economic growth, and the unemployment rate has declined to around 2. 5 percent, the level observed during the bubble period ( chart 5 ). total cash earnings per employee have risen moderately but steadily. against the background of improvement in the employment and income situation, private consumption also has been increasing moderately, albeit with fluctuations. with regard to the outlook, japan's economy will likely continue on an expanding trend. the

and chemical products reflecting the increase in crude oil prices to date. meanwhile, consumer prices continue to be somewhat weak owing to the slight decrease in the prices of private - sector services and the decline in prices of imported products reflecting the past appreciation of the yen. corporate service prices are still falling slowly. as for the outlook, upward pressure on prices is likely to arise from the gradual improvement in domestic supply - demand balance and from the rise in crude oil prices. on the other hand, downward this report was written based on data and information available when the bank of japan monetary policy meeting was held on 12 june 2000. the bank ’ s view on recent economic and financial developments, determined by the policy board at the monetary policy meeting held on 12 june 2000 as the basis of monetary policy decisions. pressure is expected from the long - term declining trend of machinery prices due to technological innovations and from the fall in prices of imported products reflecting the past appreciation of the yen. on balance, overall prices are likely to remain unchanged. however, attention should still be paid to the downward pressure on prices stemming from weak demand, although the pressure has weakened given some recovery in private demand. in the financial market, the overnight call rate has generally stayed near zero, and financial institutions have been confident about the availability of overnight funds. the amount of funds outstanding in the call money market is declining gradually. interest rates on term instruments basically continue to be stable but have increased somewhat from the start of june. the japan premium remains negligible. yields on long - term government bonds have been moving in the range of 1. 6 - 1. 8 percent. the yield spread between private bonds ( bank debentures and corporate bonds ) and government bonds remains mostly unchanged. stock prices fell sharply until the end of may triggered by the drop in u. s. stocks but have recovered thereafter. in the foreign exchange market, the yen temporarily rose to around 110 yen in mid - may but then strengthened against the u. s. dollar. the yen is currently being traded in the range of 105 - 107 yen. with regard to corporate finance, private banks have basically retained their cautious lending attitude. however, constraint that had been caused by severe fund - raising conditions and insufficient capital base has eased considerably. given this, major banks are becoming more active in extending loans, while carefully evaluating the credit risks involved. on the other hand, the improvement in economic activities has not stimulated corporate demand for external funds, since firms ’ cash flow is increasing in