fiscal 1997. against the background of the steady overseas demand and the yen ’ s depreciation to date, real exports stayed firm in july after having increased significantly in the second quarter reflecting some additional temporary factors. real imports had been stagnant since april, but rose in july reflecting the rise in imports of foodstuffs and airplanes, in addition to the increasing trend of information - related goods. as a result, the real trade surplus stopped rising in july after the significant increase in the second quarter. the nominal current - account surplus showed a large expansion in the second quarter 1997, partly reflecting the decline in crude oil prices since early 1997. industrial production in the second quarter has been firm and remained virtually unchanged after recording high growth during the second half of 1996 and the first quarter 1997. despite the decline in demand following the surge ahead of the consumption tax hike, factors such as the substantial increase in exports and the rebuilding of inventories have supported production. production is expected to increase slightly in july and august compared to the second quarter. meanwhile, inventories are at appropriate levels on the whole, despite some accumulation in industries such as in automobiles. labor market conditions have continued to improve on the whole. although the unemployment rate remains at a high level, the growth in nominal wages has been increasing and the year - to - year employment growth has started to gather pace, albeit gradually, reflecting the increase in production and corporate profits. prices remained stable on the whole, excluding the effect of the consumption tax hike. although downward pressures remain, including that from the decline in import prices, as well as that from technological innovation in electrical machinery, domestic wholesale prices ( adjusted for seasonal electricity rates ) have remained virtually unchanged. this reflects the moderate improvement in overall domestic supply and demand conditions. the year - to - year declines in corporate service prices are narrowing steadily on the whole, partly owing to the improvement in supply and demand conditions, particularly for real estate rents and information services, although leasing charges continue to decline. consumer prices ( nationwide, excluding perishables ) overall are marginally above the previous year ’ s level mainly because the year - toyear declines in goods prices have narrowed. the growth in monetary aggregates, measured in terms of the year - to - year growth of m2 + cds average outstanding, has been growing at around 3 per cent. regarding money market rates, the overnight call rate ( uncollateralized ) has moved at a level slightly below the official discount rate. the 3 - month

bank of japan presents its quarterly economic outlook for spring 1997 bank of japan, quarterly bulletin, may 1997 ( advance summary ). 1. japan ’ s economy continues on a recovery trend despite some fluctuations caused by the rise in the consumption tax rate, with private demand showing underlying firmness. among final demand items, public - sector investment has decreased, and housing investment has declined reflecting the reversal in the stepped - up demand which took place ahead of the rise in the consumption tax rate. however, net exports have continued on an increasing trend, and business fixed investment has been rising steadily. personal consumption is on a moderate recovery trend. meanwhile, inventories are generally at appropriate levels. in these circumstances, industrial production has been strengthening since autumn 1996. labor market conditions have been improving moderately on the whole. prices have stopped declining. domestic wholesale prices ( adjusted for seasonal electricity rates ) increased in early april 1997 reflecting the rise in the consumption tax rate. however, the downward pressures remain strong on those such as electrical machinery. despite these pressures, domestic wholesale prices have remained unchanged or have increased marginally. this reflects the yen ’ s depreciation and the higher oil prices to date, as well as the moderate improvement in domestic supply and demand conditions. the year - to - year declines in corporate service prices are narrowing, and consumer prices ( nationwide, excluding perishables ) are marginally above the previous year ’ s level. with respect to commercial land prices, prices of large and well - located land suited for major developments have stopped declining, while those of land less suited for use have continued to decline. as for residential land, prices have gradually stopped declining. on the balance of payments, the real trade surplus has been on an increasing trend, and the nominal current - account surplus has also increased, albeit very moderately. 2. in the financial markets, the overnight call rate ( uncollateralized ) rose temporarily around the fiscal year - end, but has since declined to the level slightly below the official discount rate of 0. 5 per cent. the 3 - month cd rate has continued at around 0. 50 - 0. 55 per cent except for the fiscal year - end. the long - term government bond yield has been declining since summer 1996, and has recently moved at a low level of 2. 1 - 2. 2 per cent. stock prices plummeted between the end of 1996 and the beginning of 1997, and have recently stayed at somewhat over ¥18, 000. on the