BoJ keeps upbeat view on Japan, labour shortages cloud outlook

TOKYO: The Bank of Japan maintained its upbeat economic assessment for all nine regions of the country but some areas saw companies fret about rising costs from labour shortages, a sign that a tightening job market could constrain business activity.
In a quarterly report on regional conditions, the central bank on Monday said all areas were either recovering or expanding, thanks to robust overseas demand and improving private consumption.
The BoJ revised up its assessment on capital expenditure for three regions, as many firms ramped up spending on equipment to streamline operations and compensate for labour shortages.
“Japan’s economy is expected to continue expanding moderately,” BoJ Governor Haruhiko Kuroda said in a speech at the quarterly meeting of regional branch managers.
He also said the BoJ will maintain its ultra-easy policy until inflation hits its 2 per cent target, a sign the bank will lag behind its major peers in unwinding crisis-mode policies.
While many regions were enjoying a steady recovery backed by solid demand, some areas saw more firms complaining that labour shortages were pushing up costs and affecting production.
“The tightening job market continues to help lift wages and household income,” Yasuhiro Yamada, the BoJ’s Osaka branch manager, told reporters.
“But we’re also hearing more firms say parts and labour shortages are constraining their businesses,” said Yamada, who oversees the Kansai western Japan region — home to electronic giants such as Panasonic.
While some wholesale and transportation firms have succeeded in raising prices to meet higher costs, many retailers have failed to do so for fear of losing market share, said Sho Kotaka, branch manager of Sapporo, northern Japan. — Reuters