This comprehensive analysis examines the Yamaguchi Prefecture financial and economic conditions published by the Bank of Japan's Shimonoseki Branch in July 2025, providing insights into the prefecture's economic recovery status and sectoral trends.
The overall economic assessment maintains that Yamaguchi Prefecture's economy is "recovering moderately," unchanged from the previous month. The steady recovery in personal consumption and increased capital investment serve as the main drivers of economic recovery. Production activities show "signs of picking up," indicating improvement trends. While public investment remains within a flat range and housing investment shows weakness, recovery levels vary by sector.
Personal consumption demonstrates steady improvement, with department store and supermarket sales exceeding year-ago levels, driven by solid daily necessities and food sales. Demand for dining-related services is on a recovery trajectory, with notable improvement in restaurant industry sales. Travel-related spending is also trending upward, reflecting improved consumer sentiment among prefecture residents. Automobile sales show signs of recovery as supply constraints ease, with new model introduction effects also contributing.
Production and export trends show mixed results. While production shows signs of picking up, led by the chemical and transportation equipment industries, exports remain below year-ago levels, affected by decreased exports to Asia, particularly China. Although domestic demand for major chemical products remains solid, weak overseas demand presents concerns. Port cargo handling volume remains flat, with domestic demand-related cargo solid but external demand lacking strength.
Employment and income conditions continue to improve, with labor supply and demand remaining tight and the job openings-to-applicants ratio maintaining high levels. Employee income is improving, with wage increase effects from spring labor negotiations spreading to local companies. Labor shortages are severe across all industries, particularly notable in service and construction sectors. Increases in regular employment and wage rises show signs of stemming the outflow of young people to other prefectures.
Price trends show the consumer price index (excluding fresh food) remaining elevated at the mid-3% range year-on-year. Rising energy prices and increased import costs due to yen depreciation are the main factors. While corporate price pass-through is progressing, it remains a profit-squeezing factor for small and medium enterprises. Corporate bankruptcies remain within a flat range, maintained at low levels due to financial support measures.
Financial conditions show both deposits and loans exceeding year-ago levels, with regional finance remaining stable. Demand for capital investment funds is robust, with decarbonization and digital transformation-related investments becoming active. Lending rates are trending upward, reflecting the Bank of Japan's monetary policy normalization. Financial institutions maintain proactive lending attitudes, focusing on supporting regional corporate growth.
The report suggests that while Yamaguchi Prefecture's economy continues its moderate recovery centered on personal consumption and capital investment, challenges remain including export weakness and sustained price increases, indicating the need for structural reforms toward sustainable growth.