toshihiko fukui : overall review of the bank of japana€™s conduct of monetary policy statement by mr toshihiko fukui, governor of the bank of japan, concerning the bank's semiannual report on currency and monetary control, before the committee on financial affairs, house of representatives, tokyo, 11 january 2008. * * * introduction the bank of japan submitted its semiannual report on currency and monetary control for the first half of fiscal 2007 to the diet on december 11, 2007. i am pleased to have this opportunity to present an overall review of the bank's conduct of monetary policy. i. developments in japan's economy japan's economy is expanding moderately as a trend, although the pace of growth seems to be slowing mainly due to the drop in housing investment. housing investment has dropped substantially, affected by the revised building standard law coming into force. with higher materials prices, business sentiment has become somewhat cautious. exports, however, have continued to increase in a situation where overseas economies continue to expand with momentum being gained across a wide range of economies. business fixed investment has also continued to trend upward against the background of generally high corporate profits. inventories have been more or less in balance with shipments, and there has not been adjustment pressure on production capacity and labor. with regard to the household sector, although nominal wages per worker have been somewhat weak, employee income has been rising moderately with the increase in the number of employees. in this situation, private consumption has been firm. reflecting the rise in domestic and external demand, production has continued to increase. these developments seem to indicate that a virtuous circle of growth in production, income, and spending has basically remained in place. therefore, japan's economy is expected to continue expanding moderately, although for the time being the pace of growth is likely to slow in a situation where housing investment is likely to remain sluggish. global financial markets, meanwhile, have remained unsettled due to the u. s. subprime mortgage problem. the functioning of markets for securitized products has deteriorated significantly in the united states and europe, and stock markets have continued to be unstable worldwide. moreover, uncertainty regarding global economic developments, for example, downside risks to the u. s. economy, has been increasing. the bank considers it necessary to continue to monitor carefully developments in global financial markets and the global economy, as well as the effects from the rise in materials prices, such

jobseekers " and " available potential job seekers. " " unavailable jobseekers " are those who have engaged in job seeking activities within one month and are ready to work within two weeks but not immediately. " available potential jobseekers " are those who have not engaged in any job seeking activities within one month, but who wish to work and are ready to do so if a job becomes available. source : ministry of internal affairs and communications, " labour force survey ( basic tabulation and detailed tabulation ). " i will now shift to business fixed investment. as shown in chart 8, the amount outstanding of business fixed investment has recently turned to a decline, albeit marginally, after continuing on an increasing trend. this could be due to two underlying factors. first is the reactionary decline in demand after the tax hike. second is the rapid shift in perception of both manufacturing and nonmanufacturing firms with regard to their production capacity as being excessive, mainly due to the decrease in consumption triggered by the spread of covid - 19. looking at the business fixed investment plan in the bank's june tankan ( shortterm economic survey of enterprises in japan ), as shown in chart 9, the investment plans of manufacturing firms remain positive on a year - on - year basis. however, a comparison with recent revision patterns reveals that the momentum of fixed investment is weak. the business fixed investment plan figure for nonmanufacturing firms is already negative, in sharp contrast with recent revision patterns. firms in many industries will have no choice but to revise their future demand downward, if the impact of covid - 19 becomes prolonged and firms'medium - to long - term growth expectations decline. this could cause a further adjustment in business fixed investment. chart 8 business fixed investment and production capacity private non - residential investment diffusion index of " excessive capacity " minus " insufficient capacity, " % pts., reversed tril. yen production capacity di ( right scale ) - 10 - 5 nominal private nonresi. investment ( left scale ) cy 2005 excessive capacity insufficient capacity production capacity di di, % pts. manufacturing nonmanufacturing excessive capacity insufficient capacity - 10 cy 2005 note : figures for the production capacity di in the left - hand graph are those for large enterprises of all industries, and in the right - hand graph are those for large enterprises. sources : cabinet office, " quarterly estimates of gdp for april - june 2020 ( first preliminary estimates ) " ; bank of