Bank of Japan Nagasaki Office Reports Gradual Economic Recovery

On July 25, the Bank of Japan's Nagasaki Office released its latest regional economic report, providing a comprehensive overview of Nagasaki Prefecture's financial and economic conditions. The report indicates that the overall economy is gradually recovering, with notable improvements in consumption, tourism, and industrial production, despite ongoing inflationary pressures.

Consumption and Tourism: Steady Recovery Amid Inflation

Personal consumption of both goods and services is gradually improving. In May, retail sales rose by 0.8% year-on-year, while new passenger vehicle registrations increased by 3.0%.

Tourism demand is also on the rise. Compared to May of the previous year, the number of overnight guests grew by 3.4%, and visits to tourist facilities increased by 3.6%.

Investment Trends: Housing Slows, Capital Investment Stabilizes

Housing investment remains sluggish, with new housing starts in May falling below the previous year's levels. (△15.2%)

Capital investment, however, shows signs of recovery. Public works contract values exceeded those of the prior year(+53.7%), and the total floor area at the commencement of construction also surpassed last year's figures (+209.4%). That said, the pace of growth has begun to level off.

Industrial Production: Positive Momentum

Industrial production is increasing overall. Growth was observed in electrical components, devices, and shipbuilding, while machinery-related output remained weak.

Employment and Income: Mixed Signals

The labor market continues to show resilience, with the ratio of registered job offers to applicants remaining high. Moreover, employee compensation, estimated in May, rose by 4.7% compared to the same period last year.

Inflation and Business Conditions

The Consumer Price Index (CPI) for June 2025 rose by 3.7% year-on-year, reflecting persistent inflationary trends.

Corporate bankruptcies in June were below the previous year's level, and business sentiment continues to recover.

Commentary from the Nagasaki Office

The Bank of Japan's Nagasaki Office emphasized the need to closely monitor the impact of labor shortages, inflation, and international trade policy on the regional economy.

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**Reference:**

Bank of Japan Nagasaki Branch / 長崎県の金融経済概況 (Published July 2025)