trips. 2 one factor that could affect consumer sentiment more broadly is the employment and income situation. for example, if firms offer more jobs and the number of employees rises, the overall outlook for income improves, thereby making consumer sentiment more favorable. an improvement in the employment and income situation could make people more willing to borrow and spend more confidently. in fact, a strong correlation is observed between the active job openings - to - applicants ratio – which represents the number of job openings relative to the number of job seekers – and the consumer confidence index ( chart 6 ). employment conditions as suggested by the active job openings - to - applicants ratio and the unemployment rate deteriorated in the wake of the lehman shock, but thereafter have been on a recovery trend. if this trend continues, consumer sentiment is likely to be underpinned at a high level. the october 2013 issue of the regional economic report released by the bank contains a review of regional features of recent developments in consumption ( available in japanese ). bis central bankers ’ speeches b. sustainable improvement in income : rise in labor productivity a rise in labor productivity is important in terms of providing support for improvement in economic activity and income in the longer run, as this means strengthening the foundations for japan ’ s economic growth. if prospects for a sustainable improvement in income are widely acknowledged, private consumption will continue to be resilient. labor productivity per worker has been growing steadily, albeit at a moderate pace, and this trend has been firmly taking hold despite such significant events as the lehman shock and the great east japan earthquake ( chart 7 ). looking at a breakdown by industry, labor productivity in the nonmanufacturing sector has been exhibiting higher growth in the past couple of years ( chart 8 ). the level of labor productivity in the nonmanufacturing sector is still lower than that in the manufacturing sector. in addition, it remains difficult to increase value - added in some segments of the nonmanufacturing sector, due in part to various regulations. however, labor productivity in the nonmanufacturing sector as a whole continues to show higher growth than in the past, and has been exceeding the level seen before the lehman shock. developments in labor productivity include the effects of cyclical economic recovery, but the underlying trend reflects a pick - up in economic growth potential from a somewhat long - term perspective. for example, reports on interviews with firms and other relevant information across regions suggest steady progress in firms ’ efforts to create demand, such as for high

value - added services, and to make active fixed investment, with both being done across a wide range of areas such as wholesaling and retailing, construction and real estate, accommodations, and eating and drinking services. 3 recent developments in the underlying trend of labor productivity in the nonmanufacturing sector show a strong correlation with developments in private consumption ( chart 9 ). there is a possibility – although this interpretation should be taken with care – that the rise in productivity has been boosting prospects for a sustainable improvement in income, leading to higher growth in private consumption. the rise in labor productivity in the nonmanufacturing sector may also be exerting upward pressure on a broad range of prices through the growth in consumption ( chart 10 ). it can be considered that this rise has exerted a positive influence on the inflation rate through an improvement in the supply - demand balance, as its effects of increasing value - added and demand would more than offset its effects of generating price competition through cost cuts and subsequently exerting downward pressure on prices. 4 in the manufacturing sector, the rise in labor productivity in terms of value - added in japan has come to a pause. however, looking at the corporate sector, firms have been steadily enhancing their ability to make profits on a global basis. overseas, for example, they are increasing their production, fixed investment, and parts procurement. in the manufacturing sector, corporate profits have recently been growing rapidly, helped in part by developments in foreign exchange rates, and stock prices are firm, as are those in the nonmanufacturing sector ( charts 11 and 12 ). it should also be noted that japan ’ s net income from the rest of the world exceeds the historical peak ( chart 13 ). if the current account surplus is maintained see the october 2013 issue of the regional economic report released by the bank ( only the summary of the report is available in english ) and the report on the features of and background to business fixed investment in the nonmanufacturing sector of the chubu region released by the bank ’ s nagoya branch on october 18, 2013 ( available in japanese ). empirical studies also indicate that a rise in productivity will improve the supply - demand balance in a sustainable manner, thereby exerting positive effects on the inflation rate. for example, see ryuzo miyao, “ nihon no keiki hendou youin : jikeiretsu bunseki karano shiten ( sources for japan ’ s economic