BOJ Keeps Regional Assessments Unchanged in January Report as Firms Signal Further Wage Gains

Overview

• The Bank of Japan’s January Sakura Report kept economic judgments unchanged across all nine regions, characterizing conditions as in gradual recovery.
• Many companies anticipate high wage increases in fiscal 2026, though smaller firms voiced caution about the scale of raises.
• The report flags potential fallout from worsening Japan–China relations, with particular concern for accommodation and hospitality.
• Public investment, business fixed investment and private consumption remain generally firm, while employment and income continue to improve.
• Weakness lingers in housing and some production areas, including temporary steel output declines, even as tourism supports regional pockets such as Okinawa.