the unemployment rate and the ratio of job offers to applicants having almost recovered to the level observed prior to the lehman shock. there has also been an increasing sense of a labor shortage on the firms ’ side ( chart 4 ). this improvement in the employment situation has started to influence wages. the year - on - year rate of change in nominal wages per employee has gradually stopped declining on the whole, partly due to growth in summer bonuses for the first time in three years. meanwhile, scheduled wages per employee as a whole have remained negative year - on - year, and this is partly attributable to a shortening in hours worked due to the increased labor participation of women and the elderly in the form of part - time workers. nevertheless, as the number of employees has been increasing, employee income – the number of employees times wages per employee – has turned positive year - on - year ( chart 5 ). thus, the income situation as a whole has been gradually improving. going forward, an improving trend in the employment situation is likely to continue as the economy recovers moderately, and nominal wages per employee are expected to be put under upward pressure gradually. from a somewhat longer - term perspective, wages will likely show a clear uptrend as the effects of tightening supply and demand conditions in the labor market emerge and inflation expectations rise. while we are intrinsically aware of the severe competitive environment surrounding firms, we expect that wages will increase, supported by improving corporate profits, and also by initiatives pursued through cooperation among the government, workers, and employers. another important point in considering the future of domestic demand is the developments in business fixed investment in the corporate sector. reflecting the major feature of the economic recovery this time, business fixed investment has been resilient in the nonmanufacturing sector, and recently there also are signs of improvement in the manufacturing sector, which has been lagging, and thus business fixed investment has been picking up on the whole ( chart 6 ). regarding the outlook for the situation surrounding business fixed environment, accommodative financial conditions under the qqe are expected to underpin business fixed investment. in the context of investment profitability, the extent of the monetary easing stimulus to encourage investment is likely to strengthen, reflecting a rise in the rate of return on capital due to economic recovery, together with declining real interest rates, partly in bis central bankers ’ speeches reflection of a rise in inflation expectations. in addition, the effects of various anticipated tax reduction measures

exporting economies has been lacking momentum compared with a while ago, partly due to such problems as excess debt. in addition, financial conditions have been on a tightening trend – particularly in economies with current account deficits – such that progress in currency depreciation and declines in stock prices were partly observed, reflecting speculation about the direction of u. s. monetary policy, and in some economies, policy interest rates were raised in response to the currency depreciation. therefore, these economies will likely lack growth momentum for the time being. from a longer - term perspective, however, growth rates are expected to pick up again as the u. s. and other advanced economies improve. as mentioned, each country and region has its own respective risks, but the baseline scenario is that overseas economies, particularly the advanced economies, are expected to pick up gradually. in this situation, with regard to japan ’ s economy, external demand is expected to increase moderately. effects of the consumption tax hikes at the beginning of october 2013, the government decided to raise the consumption tax rate to 8 percent in april 2014 as initially scheduled. the rate hike is a part of the government ’ s bis central bankers ’ speeches efforts to secure stable financial resources for social security functions and to establish a sustainable fiscal structure in the medium to long term, and the bank considers the government ’ s decision as extremely meaningful. in the october 2013 outlook report, on the assumption that the consumption tax rate will be raised twice, the bank considered that, while there will be a swing due to the front - loaded increase and subsequent decline in demand, japan ’ s economy is likely to continue growing at a pace above its potential, as a trend. it is true that the consumption tax hikes will have adverse effects on households ’ real disposable incomes. however, the adverse effects are expected to be mitigated to some extent, partly because ( 1 ) various economic measures are scheduled to be taken by the government, ( 2 ) the tax hikes seem to have already been factored in substantially among households, and ( 3 ) the rate hikes are expected to have the effect of alleviating households ’ future concerns over the fiscal condition and the social security system. ii. price developments in japan let me now turn to the price developments in japan. the year - on - year rate of change in the consumer price index ( cpi, all items excluding fresh food ) turned positive in june 2013 for the first time in 14 months and has