Monthly Economic ReportExecutive Summary( nov 2025 )
(Provisional translation)
(Assessment of the current state of the Japanese economy)
The Japanese economy is recovering at a moderate pace, while the effects caused from the U.S. trade policies are seen mainly in the automotive industry.
- Private consumption shows movements of picking up.
- Business investment is picking up moderately.
- Exports are almost flat.
- Industrial production is flat.
- Corporate profits improvement appears to be pausing, while the effects caused from the U.S. trade policies are seen mainly in the automotive industry.
Firms'judgments on current business conditions have been almost flat. - The employment situation shows movements of improvement.
- Consumer prices have been rising.
Concerning short-term prospects, the improvement in the employment and income situation and the effects of the policies are expected to support a moderate recovery, while attention should be given to downturn risks of the Japanese economy due to the impact of the U.S. trade policies are increasing. In addition, the effects of continued price increases on private consumption are also downside risks to the Japanese economy. Also, continued attention should be given to the effects of fluctuations in the financial and capital markets.
(Policy stance)
The Government will strive to build a “Strong Japanese Economy” through the strategic employment of fiscal policies embracing an approach of “responsible and proactive public finances” and based on the principle of “a sound economy is the foundation of fiscal health”.
The Government will restore strength to the Japanese economy while tackling rising prices and safeguarding people's daily lives. To this end, the Government formulated “Comprehensive Economic Measures to Build a “Strong Japanese Economy”” consisting of three pillars “Securing Everyday Life and Measures to address rising prices”; “Strategic Investments that Enhance Resilience against Potential Crises”; and “Strengthening Defense Capability and Diplomatic Power”. The Government will exert early passage of the FY2025 second supplementary budget, and will implement related measures promptly once it is determined.
The Government and the Bank of Japan will continue to work closely together to conduct flexible policy management in response to economic and price developments.
The Government expects the Bank to achieve the price stability target of two percent in a sustainable and stable manner, while confirming the virtuous cycle between wages and prices, by conducting appropriate monetary policy management in light of economic activity, prices and financial conditions.
Detailed explanations
1. Demand trends such as consumption and investment
Real GDP (gross domestic product) in the July-September quarter of 2025 decreased by 0.4% on a quarterly basis (at an annual rate of 1.8%), posting negative growth for the first time in six quarters. Nominal GDP increased by 0.1% on a quarterly basis, posting positive growth for the sixth consecutive quarter.
Private consumption shows movements of picking up.
According to Quarterly Estimates of GDP for July-September 2025 (First Preliminary Estimates), the real term of private consumption increased by 0.1% from the previous quarter. According to Consumption Trend Index (CTI), the real term of Total Consumption Trend Index (CTI macro) increased by 0.1% from the previous month in September.
As for each index, looking at the Consumption Trend Index (CTI), which comprises demand-side statistics, the real value of the Household Consumption Trend Index (CTI micro, total households) decreased by 0.3% from the previous month in September. Looking at Current Survey of Commerce, which comprises supply-side statistics, the retail sales value increased by 0.0% from the previous month in September.
Looking at the background of consumption trends, real wage income of employees is picking up moderately. Consumer confidence is picking up.
Moreover, based on the interview results, new automobile sales appear to be pausing for picking up. Home appliance sales are increasing moderately. Travel is almost flat. Eating-out is increasing moderately.
Based on these results, private consumption shows movements of picking up.
Concerning short-term prospects, consumption is expected to pick up, supported by the improvement in the employment and income situations. However, attention should be given to the trends in consumer sentiment.
Business investment is picking up moderately.
Business investment is picking up moderately. The Quarterly Financial Statements Statistics of Corporations by Industry (April-June survey, including software investment) show that business investment increased in the April-June quarter of 2025 by 1.6% from the previous quarter. By industry, business investment increased for manufacturers by 6.3% from the previous quarter and decreased for non-manufacturers by 1.0%.
Capital Goods Shipments and Imports (excluding transport equipment), which comprise supply-side statistics on investment in machinery and equipment, are almost flat. Software investment is increasing.
According to the Short-Term Economic Survey of Enterprises in Japan (BOJ Tankan) (September survey), planned business investment for all industries in fiscal year 2025 is expected to increase. According to the BOJ Tankan (September survey), DI for firms'judgment on production capacity was +1 for manufacturers, showing that the sense of excessive capacity was at the same level as the June survey (+1), while the DI was -2 for all industries, including non-manufacturers, showing that the sense of insufficient capacity was at the same level as the June survey (-2). The figures for Orders Received for Machinery, a leading indicator, appear to be pausing for picking up. The planned amount of construction shows movements of picking up.
As for short-term prospects, business investment is expected to continue to be on a pickup trend, mainly reflecting corporate profits, which have been steady so far, and actions for labor-saving investment.
Housing construction is in a weak tone.
Housing construction is in a weak tone. New construction starts of dwellings increased by 2.4% from the previous month to 728,000 dwelling units (annualized) in September. By owner occupant relation, construction of owned houses and houses for sale is in a weak tone. Construction of houses for rent has been in a weak tone recently. In addition, the total number of sales of condominiums in the Tokyo metropolitan area is almost flat.
As for short-term prospects, housing construction is expected to remain in a weak tone for the time being.
Public investment shows steady performance.
Public investment shows steady performance. The amount of public construction completed in September decreased by 2.9% from the previous month, the amount of contracted public works in October increased by 7.2% from the previous month, and the amount of public works orders received in September increased by 14.4% from the previous month.
As for short-term prospects, public investment is expected to show steady performance due to the execution of related budgets.
Exports are almost flat. Imports are almost flat. The balance of goods and services is in deficit.
Exports are almost flat. By region, exports to Asia have been in a weak tone recently. Exports to the U.S. show signs of picking up. Exports to the EU and other regions are almost flat. As for short-term prospects of exports, attention should be given to such factors as the direct impact of the tariff increase by the U.S., and the indirect impact of trade issues through the world economy.
Imports are almost flat. By region, imports from Asia and the EU are almost flat. Imports from the U.S. have been showing movements of picking up recently. Concerning short-term prospects, imports are expected to pick up.
The balance of goods and services is in deficit.
The surplus in the balance of trade in September increased, as export values increased to a larger extent than import values. The balance of services is in deficit.
2. Corporate activities and employment
Industrial production is flat.
Industrial production is flat. The Indices of Industrial Production increased by 2.6% from the previous month in September. The Indices of Industrial Inventories increased by 0.8% from the previous month in September. The Survey of Production Forecast in Manufacturing expects an increase of 1.9% in October and a decrease of 0.9% in November.
By industry, transport equipment is flat. Production machinery is flat. Electronic parts and devices have been picking up recently.
As for short-term prospects of production, attention should be given to such factors as the impact of trade issues.
Tertiary industry activity is increasing moderately.
Corporate profits improvement appears to be pausing, while the effects caused from the U.S. trade policies are seen mainly in the automotive industry. Firms’ judgments on current business conditions have been almost flat. The number of corporate bankruptcies has been increasing recently.
Corporate profits improvement appears to be pausing, while the effects caused from the U.S. trade policies are seen mainly in the automotive industry. During the July-September quarter of 2025, the current profits of the listed companies increased from the previous year both for manufacturers and non-manufacturers. According to the BOJ Tankan (September survey), in fiscal year 2025, sales are expected to increase by 2.1% in the first half of the year and are expected to increase by 1.3% in the second half from the previous year. Current profits are expected to decrease by 1.9% in the first half and decrease by 7.8% in the second half from the previous year.
Firms'judgments on current business conditions have been almost flat. The BOJ Tankan (September survey) revealed that DI for firms'judgment on current business conditions remained unchanged for all enterprises in all industries. By industry, the DI remained unchanged for all enterprises in the manufacturing industry and for all enterprises in the non-manufacturing industry. Firms'judgment on future business conditions, which indicates the business conditions as of December, is slightly more cautious than that on current business conditions. According to the corporate activity-related DI of the Economy Watchers Survey (October survey), current and prospective business conditions both rose.
The number of corporate bankruptcies has been increasing recently. The number of corporate bankruptcies was 873 in September and 965 in October. Total liabilities were 112.4 billion yen in September and 127.5 billion yen in October.
The employment situation shows movements of improvement.
The employment situation shows movements of improvement. The sense of a labor shortage is at a high level.
The total unemployment rate was 2.6% in September, the same level as the previous month. The labor force, the number of employed persons, and the number of unemployed persons all increased. The employment rate is almost flat and is at a high level.
Looking at Employment Referrals for General Workers, the number of new job offers at Public Employment Security Offices is on a downward trend. The active job openings to applicants ratio has been decreasing moderately recently.
Looking at the year-on-year number of job offers at private employment agencies, it is on a slight downward trend for regular employment, while it is on a moderate downward trend for part-time employment (excluding “casual work”).
As for the movement of wages, contractual cash earnings and the total cash earnings are increasing. Real wage income of employees is picking up moderately. Overtime hours worked in the manufacturing industry decreased.
According to the BOJ Tankan, DI for firms'judgment on current employment conditions, which shows firms'sense of a labor shortage, was -36 for all industries in September, showing that the sense of a labor shortage increased by 1 point from the June survey (-35). The DI was -24 for manufacturers, showing that the sense of a labor shortage increased by 2 points from the June survey (-22), and the DI was -44 for non-manufacturers, showing that the sense of a labor shortage was at the same level as the June survey (-44).
As for short-term prospects of the employment situation, it is expected to improve.
3. Prices and the financial market
Producer prices have been rising moderately recently. Consumer prices have been rising.
Producer prices have been rising moderately recently.
Consumer prices, in terms of general, excluding fresh food and energy, have been rising.
Consumer prices, in terms of general, excluding fresh food (referred to as “core”) have been rising moderately recently. The values of the chain index and the fixed base index both rose by 0.4% from the previous month in October. In terms of general, the values of the chain index and the fixed base index both rose by 0.4% from the previous month in October.
According to the Monthly Consumer Confidence Survey (multi-person households), as for the ratio of households expecting prices to rise a year ahead, 9.2% expected a rise of less than 2% (10.2% in the previous month), 32.9% expected a rise of 2 to 5% (34.0% in the previous month), 29.6% expected a rise of 5 to 10% (29.8% in the previous month), and 20.9% expected a rise of 10% or more (19.4% in the previous month) in October.
As for short-term prospects, consumer prices (general, excluding fresh food and energy) are expected to rise for the time being.
As for stock prices, after rising from the 51,300-yen level to the 52,400-yen level, the Nikkei Stock Average declined to the 48,600-yen level. The yen against the U.S. dollar (inter-bank spot rate) moved in the direction of depreciation from the 152-yen level to the 157-yen level.