The Bank of Japan Niigata Branch published the Niigata Prefecture Financial and Economic Trends in July 2025, providing a detailed analysis of the prefecture's economy, which continues to recover despite the impact of high raw material costs.
The report assesses that Niigata Prefecture's economy is recovering despite being affected by high raw material costs. Capital investment increases and personal consumption recovery are driving the economy, while production remains within a sideways range. Exports remain sideways overall despite recovery in electrical machinery, with rising raw material costs acting as a drag. Recovery levels differ between industries and sectors, with polarization becoming increasingly evident.
Capital investment is becoming more active as companies prepare for the future. The fiscal 2025 capital investment plan from the Tankan survey for all industries shows high growth of 6.9% year-on-year. In addition to capacity expansion investment, labor-saving and automation investments responding to labor shortages are active. DX-related and decarbonization-related investments are also expanding regardless of company size. Non-residential building floor area starts decreased 14.3% year-on-year in May, though plans remain solid. Small and medium enterprises are also positive about productivity improvement investments, with utilization of various subsidies progressing.
Personal consumption is recovering with changing consumer behavior patterns. Department store and supermarket sales increased 4.5% year-on-year in May, with food products performing solidly. Clothing shows a pause in recovery movements, with cautious attitudes toward high-priced items continuing. New passenger car registrations increased 1.4% year-on-year in May, showing moderate recovery. Home appliance sales increased 2.0% year-on-year in May but remain weak, with replacement cycles lengthening. Travel handling is recovering, with room occupancy rates at 42.7% in April as tourism demand gradually normalizes.
Production activities show contrasting performance by industry. Food products including rice crackers and processed marine products remain solid, supported by regional brand strength and stable demand. Electronic parts and devices are gradually recovering, aided by inventory adjustment progress. General machinery including construction machinery, machine tools, and industrial machinery shows a pause in recovery movements. Metal products such as work tools and steel show weak movements, affected by declining overseas demand and high raw material costs. Transportation machinery including automobile-related parts shows weak movements, with semiconductor shortage effects lingering. Textiles continue sluggish production, facing structural demand decline.
Employment and income conditions are improving while corporate profits face challenges. The job opening ratio maintains a high level of 1.43 in May, though it decreased from the previous month, indicating a pause in job offers. Employee income shows improvement movements, with spring wage negotiation effects spreading to the prefecture. Ordinary profits in fiscal 2024 increased 12.3% year-on-year, aided by progress in price pass-through. The fiscal 2025 plan projects an 11.3% decrease, factoring in continued high raw material costs and intensifying competition. Profit improvements at small and medium enterprises lag behind large companies, with differences in cost absorption capacity becoming evident.
Financial conditions show real deposits up 0.5% year-on-year, with personal deposit accumulation continuing. Loans decreased 0.8% year-on-year, affected by completion of large corporate funding demand and shifts to corporate bonds. Corporate bankruptcies numbered 10, below the previous year, though total liabilities increased. The persistence of high raw material prices and rising import costs due to yen depreciation pose the greatest risks. Concerns also include uncertainty in external demand environments such as renewed US-China trade friction and China's economic slowdown.
The report concludes that while Niigata Prefecture's economy continues its domestic demand-led recovery, prolonged high raw material costs and weak external demand weigh on the manufacturing sector, making structural competitiveness enhancement an urgent priority.