The BoJ’s Regional Economic Report released today painted a mixed picture of recovery, with assessments for eight regions left unchanged and one downgraded. Most local economies were described as “recovering moderately” or “picking up” .
Businesses in some areas reported that they may scale back wage hikes if tariffs begin to bite into profits, a risk that could slow Japan’s nascent wage-led inflation. Still, several regions pointed to ongoing wage pressures from tight labor markets and rising living costs, suggesting that the underlying trend in income growth remains intact for now.
The survey also revealed continued commitment to capital investment, particularly in automation and IT-related projects, as firms seek efficiency gains. However, a number of companies plan to delay or reassess spending amid uncertainty over global demand and the evolving impact of tariffs.
