Monthly Economic ReportExecutive Summary( apr 2026 )
(Provisional translation)
(Assessment of the current state of the Japanese economy)
The Japanese economy is recovering at a moderate pace, while attention should be given to the effects caused from the situation in the Middle East.
- Private consumption shows movements of picking up. However, attention should be given to weak movements of consumer sentiment recently.
- Business investment is picking up.
- Exports are almost flat.
- Industrial production is flat.
- Corporate profits, while affected by the U.S. trade policies, show movements of improvement.
- The employment situation shows movements of improvement.
- Consumer prices have been rising moderately recently.
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 the effects caused from the situation in the Middle East. Also, attention should be given to the effects of fluctuations in the financial and capital markets and situations in U.S. trade policies.
(Policy stance)
The Government will restore strength to the Japanese economy while tackling rising prices and safeguarding people's daily lives. To this end, the Government will promptly implement “Comprehensive Economic Measures to Build a “Strong Japanese Economy”” consisting of three pillars “Ensuring security in people’s daily lives: Measures to address rising prices”; “Strategic investments that enhance resilience against potential crises: Building a robust economy through growth-oriented investment”; and “Strengthening defense capability and diplomatic power”, the FY2025 supplementary budget, and the FY2026 budget.
In response to the situation in the Middle East, in the near term, the Government has carried out emergency measures to curb dramatic fluctuations in the price of fuel oil. Through alternative procurement of crude oil and the release of oil stockpiles, the Government will work to ensure a stable supply of crude oil. The Government will also work to ensure a stable supply and the smooth distribution of critical materials.
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 of Japan 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
Private consumption shows movements of picking up. However, attention should be given to weak movements of consumer sentiment recently.
According to Quarterly Estimates of GDP for October-December 2025 (Second Preliminary Estimates), the real term of private consumption increased by 0.3% from the previous quarter. According to Consumption Trend Index (CTI), the real term of Total Consumption Trend Index (CTI macro) increased by 0.0% from the previous month in February.
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 0.1% from the previous month in February. Looking at Current Survey of Commerce, which comprises supply-side statistics, the retail sales value decreased by 2.0% from the previous month in February.
Looking at the background of consumption trends, real wage income of employees has been increasing moderately recently. Consumer sentiment has been weak recently.
Moreover, based on the interview results, new automobile sales are almost flat. Home appliance sales are increasing moderately. Travel has been in a weak tone recently. Eating-out is increasing moderately.
Based on these results, private consumption shows movements of picking up. However, attention should be given to weak movements of consumer sentiment recently.
As for short-term prospects of consumption, the improvement in the employment and income situations is expected to support movements of picking up. However, attention should be given to the weak movements in consumer sentiment.
Business investment is picking up.
Business investment is picking up. The Quarterly Financial Statements Statistics of Corporations by Industry (October-December survey, including software investment) show that business investment increased in the October-December quarter of 2025 by 3.5% from the previous quarter. By industry, business investment decreased for manufacturers by 0.2% from the previous quarter and increased for non-manufacturers by 5.4%.
Capital Goods Shipments and Imports (excluding transport equipment), which comprise supply-side statistics on investment in machinery and equipment, show movements of picking up. Software investment is increasing.
According to the Short-Term Economic Survey of Enterprises in Japan (BOJ Tankan) (March survey), planned business investment for all industries in fiscal year 2025 is expected to increase. Planned business investment in fiscal year 2026 is expected to increase. According to the BOJ Tankan (March survey), the DI for firms' judgment on production capacity was -1 for manufacturers, showing that the sense of insufficient capacity was at the same level as the December survey (-1), while the DI was -3 for all industries, including non-manufacturers, showing that the sense of insufficient capacity was at the same level as the December survey (-3). The figures for Orders Received for Machinery, a leading indicator, are picking up. The planned amount of construction is almost flat.
As for short-term prospects, business investment is expected to continue to be on a pickup trend, mainly reflecting steady corporate profits 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 decreased by 0.6% from the previous month to 751,000 dwelling units (annualized) in February. By owner occupant relation, construction of owned houses and houses for sale is in a weak tone. Construction of houses for rent is almost flat. 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 February increased by 1.9% from the previous month, the amount of contracted public works in March increased by 0.9% from the previous month, and the amount of public works orders received in February increased by 18.4% from the previous month.
As for short-term prospects, public investment, partly due to the effect of the supplementary budget, is expected to show steady performance.
Exports are almost flat. Imports are almost flat. The balance of goods and services is in near equilibrium.
Exports are almost flat. By region, exports to Asia, the EU, and other regions are almost flat. Exports to the U.S. show movements of picking up. As for short-term prospects of exports, attention should be given to the risk of downward pressure due to the situation in the Middle East, and to the impact of trade issues.
Imports are almost flat. By region, imports from Asia, the U.S., and the EU are almost flat. Concerning short-term prospects of imports, attention should be given to the risk of downward pressure due to the situation in the Middle East.
The balance of goods and services is in near equilibrium.
The balance of trade in February turned to deficit, as import values increased while export values decreased. 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 decreased by 2.0% from the previous month in February. The Indices of Industrial Inventories increased by 0.3% from the previous month in February. The Survey of Production Forecast in Manufacturing expects an increase of 3.8% in March and 3.3% in April.
By industry, transport equipment is flat. Production machinery is flat. Electronic parts and devices are picking up.
Concerning short-term prospects of production, attention should be given to the risk of downward pressure due to the situation in the Middle East.
Tertiary industry activity is increasing moderately.
Corporate profits, while affected by the U.S. trade policies, show movements of improvement. Firms’ judgment on current business conditions has been almost flat. However, their judgement on future business conditions is slightly more cautious. Therefore, attention should be given to the effects of the situation in the Middle East. The number of corporate bankruptcies appears to be increasing.
Corporate profits, while affected by the U.S. trade policies, show movements of improvement. According to the Quarterly Financial Statements Statistics of Corporations by Industry (October-December survey), corporate profits during the October-December quarter of 2025 increased by 4.7% from the previous year and increased by 1.6% from the previous quarter. By industry, manufacturers saw an increase of 0.9% in corporate profits from the previous year, and non-manufacturers saw an increase of 7.1%. By size of company, large and medium-sized companies saw an increase of 6.4% from the previous year, and small companies saw a decrease of 0.7%. According to the BOJ Tankan (March survey), in fiscal year 2026, sales are expected to increase by 1.7% in the first half of the year and 0.9% in the second half from the previous year. Current profits are expected to decrease by 3.5% in the first half and 1.2% in the second half from the previous year.
Firms' judgment on current business conditions has been almost flat. However, their judgement on future business conditions is slightly more cautious. Therefore, attention should be given to the effects of the situation in the Middle East. The BOJ Tankan (March survey) revealed that the DI for firms' judgment on current business conditions remained unchanged for all enterprises in all industries. By industry, the DI rose for all enterprises in the manufacturing industry by 1 point and fell for all enterprises in the non-manufacturing industry by 1 point from the previous quarter. Firms' judgment on future business conditions, which indicates the business conditions as of June, is slightly more cautious than their judgement on current business conditions. Therefore, attention should be given to the effects of the situation in the Middle East. According to the corporate activity-related DI of the Economy Watchers Survey (March survey), current and prospective business conditions both fell.
The number of corporate bankruptcies appears to be increasing. The number of corporate bankruptcies was 851 in February and 924 in March. Total liabilities were 133.1 billion yen in February and 114.8 billion yen in March.
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 February, a decrease of 0.1 percentage points from the previous month. The labor force and the number of employed persons increased. The number of unemployed persons decreased. The employment rate is on a moderate upward trend.
Looking at Employment Referrals for General Workers, the number of new job offers at Public Employment Security Offices has bottomed out recently. The active job openings to applicants ratio has been showing signs of bottoming out recently.
Looking at the year-on-year number of job offers at private employment agencies, it is on a moderate downward trend for regular employment, while it is on a slight upward 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 has been increasing moderately recently. Overtime hours worked in the manufacturing industry are flat.
According to the BOJ Tankan, the DI for firms' judgment on current employment conditions, which shows firms' sense of a labor shortage, was -38 for all industries in March, showing that the sense of a labor shortage was at the same level as the December survey (-38). The DI was -28 for manufacturers, showing that the sense of a labor shortage increased by 2 points from the December survey (-26), and the DI was -45 for non-manufacturers, showing that the sense of a labor shortage decreased by 1 point from the December survey (-46).
As for short-term prospects of the employment situation, it is expected to improve.
3. Prices and the financial market
Producer prices are rising moderately. Consumer prices have been rising moderately recently.
Producer prices are rising moderately.
Consumer prices, in terms of general, excluding fresh food and energy, have been rising moderately recently. The values of the chain index and the fixed base index both rose by 0.1% from the previous month in February. Compared to the previous year, the chain and fixed base index numbers rose by 2.4% and 2.5% respectively.
Consumer prices, in terms of general, excluding fresh food (referred to as “core”) have been flat recently.
According to the Monthly Consumer Confidence Survey (multi-person households), as for the ratio of households expecting prices to rise a year ahead, 7.7% expected a rise of less than 2% (14.2% in the previous month), 32.0% expected a rise of 2 to 5% (34.9% in the previous month), 32.0% expected a rise of 5 to 10% (22.2% in the previous month), and 21.4% expected a rise of 10% or more (14.3% in the previous month) in March.
As for short-term prospects, consumer prices (general, excluding fresh food and energy) are expected to rise moderately for the time being.
As for stock prices, the Nikkei Stock Average rose from the 51,800-yen level to the 59,300-yen level. The yen against the U.S. dollar (inter-bank spot rate) moved from the 158-yen level to the 159-yen level.