The Bank of Japan Hiroshima Branch published the Hiroshima Prefecture Financial and Economic Monthly Report on July 1, 2025, providing a comprehensive analysis of the current state of the prefectural economy and future uncertainties.
The report maintains that Hiroshima Prefecture's economy continues on a moderate recovery trend, supported by increased capital investment and gradual recovery in personal consumption. While production remains within a sideways range and exports show weak movements, indicating a lack of dynamism in the manufacturing sector, the overall recovery trajectory persists. However, extremely high uncertainty in overseas economies has led to some deterioration in business sentiment among local companies.
Personal consumption shows mixed patterns across sectors. Department store sales remain within a sideways range with high-end demand showing some moderation but remaining solid. Supermarket sales remain firm despite the impact of price increases, supported by food and daily necessities. Convenience store sales continue their moderate recovery trend, aided by increased customer traffic. Home appliance sales show signs of recovery driven by demand for energy-efficient appliance replacements, while automobile sales have recovered due to easing supply constraints and new model effects.
Tourism and service demand continues to recover, with visitor numbers to major tourist sites gradually increasing, centered on foreign tourists. Visitor numbers to World Heritage sites such as Miyajima and the Peace Memorial Park remain strong. Hotel occupancy rates are improving, with inbound demand recovery becoming increasingly evident. While travel handling remains within a sideways range, domestic travel remains solid though overseas travel continues to struggle.
In the corporate sector, capital investment maintains an increasing trend, led by capacity expansion investment in manufacturing and DX-related investment. Production remains within a sideways range, with automobile-related sectors performing well while machinery and steel show weakness. Exports remain weak, affected by declining exports to Asia, particularly China. Public investment remains within a sideways range, with disaster prevention and mitigation-related construction remaining solid but new projects limited.
The employment, income, and price environment shows gradual improvement, with the job opening ratio maintaining high levels. Labor shortages persist across all industries, particularly severe in construction, food service, and nursing care sectors. Wages are rising, supported by spring wage negotiations and improved treatment for securing human resources. Consumer prices excluding fresh food continue to rise around 3% year-on-year, pushed up by energy and food prices.
Looking ahead, the report warns that while Hiroshima Prefecture's economy maintains its moderate recovery trend, the heightened uncertainty in overseas economies and deteriorating business sentiment require careful monitoring of future developments. Key risks include the extremely high uncertainty in overseas economic and price trends due to trade policies in various countries, risks of renewed US-China trade friction, concerns about European economic slowdown affecting corporate sentiment, the impact of yen depreciation on import prices and corporate earnings, and the importance of assessing how changes in wage and price-setting behavior affect the regional economy.