Bank of Japan raises economic assessments for Tohoku and Shikoku, citing AI-related demand

The Bank of Japan raised its economic assessments for Tohoku and Shikoku, two of Japan's nine regions, in its October regional economic report, known as the Sakura Report, published on October 8. The assessments for the other seven regions were left unchanged. The assessments were reported at a branch managers' meeting held that day; Nikkei said the meeting is held once every three months to compile the report. [ 1 , 2 , 3 , 4 , 5 , 6 , 7 ]

Tohoku was raised from "picking up" to "recovering moderately", and Shikoku from "picking up moderately" to "picking up", compared with the previous report in July. TBS NEWS DIG reported that the Tohoku upgrade reflected expanding production of semiconductor manufacturing equipment and more housing starts, and the Shikoku upgrade rising pharmaceutical production. Nikkei reported an increase in large defence-related projects in Aomori, and quoted a production machinery company in Matsuyama as saying demand for its products was rising as the shipbuilding industry was booming. [ 4 , 5 , 6 , 7 ]

TBS NEWS DIG and Asahi Shimbun reported that the assessment of production was raised in seven regions; Asahi said these were all except Hokkaido and Tokai. According to Nikkei, almost all regions reported at the meeting that AI-related demand was supporting sentiment across many industries, with output rising in electronic components, semiconductor manufacturing equipment and communications infrastructure products for data centers. An electrical machinery company in Osaka was quoted as expecting strong demand to continue for about the next three years. A Kanazawa electronic components and devices company said full production had become the norm and it was planning investment to expand capacity. Sankei Shimbun cited a nonferrous metals company in Aomori building a new factory and an electrical machinery company in Kochi introducing new production equipment. [ 4 , 5 , 6 , 7 ]

TBS NEWS DIG reported that concerns about procuring raw materials because of the Middle East situation had largely eased, while purchase costs were rising and being added to selling prices, with differences by industry and region. Nikkei reported that companies were passing on higher energy prices, which it linked to a prolonged clash between the United States and Iran, and rising labour costs. A Hakodate food company said it was raising the frequency of price revisions, and a Naha supermarket said customers moved to lower-priced formats after it raised prices. Nikkei said many reports indicated logistics disruption from the Middle East situation was easing. [ 4 , 5 , 6 ]

Nikkei reported that the Bank of Japan concluded that earthquakes, heavy rain and other disasters since July had temporarily weighed on consumption, but that consumption overall remained resilient, supported by improving real incomes, and that the drag on production from the Kumamoto earthquake was temporary across the supply chain. Asahi Shimbun reported that consumption was diverging between high-priced goods and daily necessities. [ 5 , 7 ]

Sankei Shimbun also interviewed an executive at Gettowakusu (ゲットワークス), a small or medium-sized company in Tokyo's Chiyoda ward that designs and operates container-type data centers, who said demand "keeps growing endlessly". [ 6 ]