1999, compared to the previous year. 2000, compared to the previous year

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２．Trends in supply and final demand

(1) Outline of trends in supply for final demand in this quarter

Although government consumption decreased by 0.5% compared to the previous quarter, private consumption increased by 0.5. Therefore, the indices of all industries(final demand components) for consumption in the first Quarter of 2001 increased by 0.2%, heralding an increase for the second consecutive quarter.

On the other hand, although residential investment decreased by 2.0% compared to the previous quarter and private investment decreased by 1.5%, public investment increased by 5.8%, and therefore the indices of all industries(final demand components) for investment increased by 1.4%.

Changes in The Indices of All Industries(final demand components)

（1995＝100, year-to-year comparison, seasonally adjusted comparison to previous quarter）

2001

１∼３４∼６７∼９10∼12 １∼３４∼６７∼９10∼12 １∼３

Consumption 1.2 2.2 0.6 0.4 0.7 ▲ 0.2 0.5 1.3 ▲ 0.1 0.9 0.2

Private consumption 1.2 2.2 0.5 0.6 0.5 ▲ 0.1 0.5 1.4 ▲ 0.2 0.7 0.5

M ining and manufacturing industry (goods) 1.5 4.9 0.5 0.2 ▲ 0.1 1.6 0.8 1.5 2.5 0.7 ▲ 0.9

Tertiary industry (services) 1.1 1.2 0.8 0.4 0.9 ▲ 0.8 0.4 1.3 ▲ 1.2 0.7 1.1

(specially posted) IT-related 20.0 18.3 10.8 0.7 9.2 2.3 10.2 ▲ 4.0 6.7 0.5 6.3

Government consumption 1.3 2.4 1.0 ▲ 0.3 1.4 ▲ 0.3 0.2 1.2 0.4 0.8 ▲ 0.5

Investment 0.2 1.8 1.9 ▲ 0.4 ▲ 0.2 ▲ 0.9 0.4 2.2 0.7 ▲ 0.5 1.4

Public investment 4.7 ▲ 6.2 ▲ 0.6 2.3 ▲ 2.7 ▲ 4.2 ▲ 2.3 3.0 ▲ 3.4 ▲ 3.4 5.8

Residential investment 1.3 1.8 1.1 7.1 1.0 ▲ 5.0 2.8 0.2 ▲ 0.8 3.8 ▲ 2.0

Private investment ▲ 2.5 6.1 3.7 ▲ 2.4 0.7 1.9 0.4 2.9 3.6 0.9 ▲ 1.5

M ining and manufacturing industry (goods) ▲ 0.1 8.0 6.1 ▲ 2.4 3.4 2.9 0.4 0.6 5.3 3.7 ▲ 5.2

Construction industry (building) ▲ 6.3 4.3 ▲ 0.6 ▲ 1.5 ▲ 3.8 ▲ 0.6 0.6 7.2 3.0 ▲ 4.0 0.6

Tertiary industry (services) ▲ 3.1 4.6 ▲ 1.0 0.5 ▲ 0.4 4.5 ▲ 4.2 4.7 1.7 2.8 ▲ 1.4

(specially posted) IT-related 8.9 13.9 11.7 ▲ 3.1 5.7 ▲ 0.8 3.3 4.8 8.5 4.8 ▲ 3.4

1999 2000 1999, compared t o the previous year 2000, compared to the previous year

（Note）IT-related consumption is consumption related to facsimiles, PHS and mobile telephones, pocket bells, cordless phones, personal computers, domestic telecommunications business (mobile communications excluded) and mobile communications which are also supplied for private consumption.

IT-related investments are investments for communication wire and power cables, optical fiber products for wires and cables, electrostatic indirect copying machines, digital color copying machines, key service units, facsimiles, electronic automatic exchange, digital transmission units, fixed communication devices, PHS and mobile telephones, pocket bells, base station communication devices, general purpose computers, mid-range computers, personal computers, external storage, input-output devices, terminal units, software development and program creation (subcontracts) which are also supplied to private enterprise facilities.

Source: The indices of all industries(final demand components)

Outline of The Indices of All Industries(final demand components)

The indices of all industries(final demand components) is an index estimated by using the mining and manufacturing industry shipment index, the tertiary industry activity index (including the public service, etc.) and the construction industry activity index, which are supply side statistical indicators, in order to grasp trends of each demand component such as consumption, investment, export and import.

Many statistical indicators for consumption and investment have a demand-side focus. For consideration from the supply side, it is necessary to quantitatively grasp what demand components are supplied with individual goods and services, so the indices of all industries(final demand components) makes distinctions based on production by demand

(2)

components in input-output tables of 1995.

By using statistical indicators from the demand side and the indices of all industries(final demand components) in complement with each other, not only can the trends in final demand be determined more precisely, but also detailed analysis on trends in IT-related investment and IT-related consumption is also possible in the indices of all industries(final demand components).

(3)

(2) Supply intended for consumption and consumption trends

① Supply activities intended for consumption

Reviewing the trends in private consumption for the first Quarter of 2001 from All-Industry Supply Index intended for private consumption, although supplies from the mining and manufacturing industry decreased by 0.9% compared to the previous quarter for the first time in six quarters, supplies from the tertiary industry increased 1.1% id. for the second consecutive quarter, resulting in a 0.5% increase in total for the second consecutive quarter.

Furthermore, IT-related consumption for this quarter rose by 6.3% compared to the previous quarter.

Trends in The Indices of All Industries(final demand components) intended for private consumption

(1995=100, seasonally adjusted)

Trends in IT-related consumption (1995=100, seasonally adjusted)

（Note）IT-related consumption for private consumption includes facsimiles, PHS/mobile telephones, pocket bells, cordless telephones, personal computers, domestic telecommunications business (mobile communication excluded) and mobile communications.

95 100 105 110 Ⅰ └ Ⅱ 1996 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 1997 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 1998 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 1999 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 2000 Ⅲ Ⅳ ┘ Ⅰ 2001 個人消費鉱工業３次産業 ▲ 1.5 ▲ 1.0 ▲ 0.5 0.0 0.5 1.0 1.5 （％） Ⅱ 2000 Ⅲ Ⅳ ┘ Ⅰ 2001 ３次産業鉱工業個人消費 Private consumption Private consumption Mining and manufacturing industry

Tertiary industry

Mining and manufacturing industry Tertiary industry 90 95 100 105 110 115 Ⅰ └ Ⅱ 1996 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 1997 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 1998 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 1999 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 2000 Ⅲ Ⅳ ┘ Ⅰ 2001 100 150 200 250 300 350 個人消費除く情報化関連消費情報化関連消費（右目盛り） ▲ 1.0 ▲ 0.5 0.0 0.5 1.0 1.5 （％） Ⅱ 2000 Ⅲ Ⅳ ┘ Ⅰ 2001 除く情報化関連消費情報化関連消費個人消費 Private consumption

IT-related consumption excluded IT-related consumption

(scale on right axis)

Private consumption IT-related consumption

IT-related consumption excluded

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② Effects on consumption by housing loans and by unrealized loss

Considering the actual condition of housing loans which households have, both outstanding liabilities of housing loans and ratio of housing loans in annual income have been on an upward trend, reaching approximately 16 million and 17% respectively in 2000. And, as for consumer propensity of households with housing loans and of households without housing loans, consumer propensity of households without housing loans has been on an upward trend since 1998 while consumer propensity of households with housing loans has been on a gradual downward trend. Furthermore, considering a result of estimation of unrealized loss and profit of houses which households have, unrealized loss has been continuously increasing. Based on the above, both housing loans and unrealized loss are considered to be restraining consumption.

Outstanding liabilities of housing loans and ratio of housing loans (households of workers)

Source: Saving Trend Survey (Ministry of Public Management, Home Affairs, Posts and Telecommunications)

Changes in consumer propensity (households of workers)

Source: Family Income and Expenditure Survey (Ministry of Public Management, Home Affairs, Posts and Telecommunications) 60 65 70 75 80 Ⅰ └ Ⅱ 1996 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 1997 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 1998 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 1999 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 2000 Ⅲ Ⅳ ┘ Ⅰ 2001 （％）ローン保有世帯Households with housing loans ローンのない世帯Households without housing loans

3 6 9 12 15 18 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 （million yen） 8 10 12 14 16 18 （％） Outstanding liabilities

Ratio of loans in annual income (scale on right axis)

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Changes in unrealized loss and profit of houses which households have

Source: Building Construction Started (Ministry of Land, Infrastructure and Transport), Urban Land Price Index (Japan Real Estate Institute), Government Finance Corporation Loan Users Survey (Government Housing Loan Corporation)

▲ 60 ▲ 50 ▲ 40 ▲ 30 ▲ 20 ▲ 10 0 10 20 30 40 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Owner-occupied houses Houses built for sale Condominiums Total (t rillion yen)

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(3) Supply intended for investment and investment trend

① Supply activities intended for investment

As for the investment trend for the first Quarter of 2001 in the indices of all industries(final demand components) intended for investment, although residential investment decreased by 2.0% compared to the previous quarter due to the decrease of new construction of owner-occupied houses and of houses built for sale such as condominiums and private investment, which had been on a recovery trend centering on IT-related investment, decreased by 1.5% for the first time in seven quarters, public investment shifted to increase by 5.8%, resulting in a shift to increase of 1.4% in the total investment.

Furthermore, IT-related investment in this quarter decreased by 3.4% compared to the previous quarter for the first time in five quarters, and non-IT-related investment decreased by 1.8% for two consecutive quarters.

Trend in The Indices of All Industries(final demand components) intended for investment

①Index level(1995＝100, seasonally adjusted) ②Compared to the previous quarter, degree of contribution to growth rate

80 85 90 95 100 105 110 115 120 Ⅰ └ Ⅲ Ⅰ └ Ⅲ Ⅰ └ Ⅲ Ⅰ └ Ⅲ Ⅰ └ Ⅲ Ⅰ 2001 Total investment Public investment Residential investment Private investment ▲ 2 ▲ 1 0 1 2 3 4 （％） Ⅱ 2000 Ⅲ Ⅳ ┘ Ⅰ 2001 Private investment Residential investment Public investment Total investment

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Trend in IT-related investment

①Index level (1995＝100, seasonally adjusted) ②Compared to the previous quarter, degree of contribution to growth rate

80 90 100 110 120 130 140 150 160 170 180 Ⅰ └ Ⅱ 1996 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 1997 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 1998 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 1999 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 2000 Ⅲ Ⅳ ┘ Ⅰ 2001 Private investment IT-related investment Non-IT-related investment ▲ 3 ▲ 2 ▲ 1 0 1 2 3 4 5 Ⅱ 2000 Ⅲ Ⅳ ┘ Ⅰ 2001 （％） Non-IT-related investment_{IT-related investment}

Private investment

（Note）IT-related investments are investments for communication wire and power cables, optical fiber products for wires and cables, electrostatic indirect copying machines, digital color copying machines, key service units, facsimiles, electronic automatic exchange, digital transmission units, fixed communication device, PHS and mobile telephones, pocket bells, base station communication devices, general purpose computers, mid-range computers, personal computers, external storage, input-output devices, terminal units, software development and program creation (subcontracts) which are also supplied to private enterprises facilities.

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② Comparison between trends in statistics from supply side and those in statistics from demand side for capital investment

Taking the relationship among the Orders Received for Machinery (Cabinet Office), which is a leading indicator of capital investment, The Indices of All Industries(final demand components), which is a statistic from the supply side and Financial Statements Statistics of Corporations by Industry(Ministry of Finance), which is a typical statistic from the demand side, it can be confirmed that the three of them are closely related to each other with temporal lags. There is a high degree of correlation, with The Indices of All Industries(final demand components) lagging behind the Orders Received for Machinery by zero to one quarter and the Financial Statements Statistics of Corporations by Industry by one to two quarters because of differences in the time of acquisition of machinery equipment; orders, shipment and installation.

Furthermore, as for factors of the gap between The Indices of All Industries(final demand components) and Financial Statements Statistics of Corporations by Industry, effects due to difference in software acquisition, differences in statistical contents such as nominal amount of money/real quantity and other nature/characteristic differences may be considered. However, it can be seen that both statistics are highly correlated.

As shown above, capital investment-related statistics from the supply side and from the demand side show approximate changes, though they are different in their concept of creation and nature. For detailed economic trend analysis, it seems useful to utilize both of them in a complement to each other while maintaining a consistent comprehension of these differences.

Comparison of trends in machinery equipment indicator

(1995＝100, seasonally adjusted)

（Note） Correlation coefficient to the Orders Received for Machinery:

The Indices of All Industries(final demand components) lags behind by one quarter (0.781) and by zero quarters (0.792) while Financial Statements Statistics of Corporations by Industry lags behind by two quarters (0.847) and by one quarter (0.837)

Source: Financial Statements Statistics of Corporations by Industry (Ministry of Finance), Orders Received for Machinery (Cabinet Office), The Indices of All Industries(final demand components)

80 90 100 110 120 130 Ⅰ └ Ⅱ 1993 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 1994 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 1995 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 1996 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 1997 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 1998 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 1999 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 2000 Ⅲ Ⅳ ┘ Ⅰ 2001 全供（鉱工業からの供給）法人季報（その他の有形固定資産）機械受注（船舶・電力を除く民需）

All-Industry Supply Index (supply from mining and manufacturing industry) Quarterly Financial Statements Statistics of Corporations (other tangible fixed assets) Machinery Orders (private demand except for

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Trends in capital investment in The Indices of All Industries(final demand components) and in Financial Statements Statistics of Corporations by Industry

①Index level (1995＝100, seasonally adjusted） ②Gap of index level and analysis of factors

90 95 100 105 110 115 120 1996 1997 1998 1999 2000

The Indices of All Industries(final demand components) (Private investment)

Financial Statements Statistics of Corporations by Industry (value of tangible fixed assets)

▲ 12 ▲ 10 ▲ 8 ▲ 6 ▲ 4 ▲ 2 0 2 4 6 8 1996 1997 1998 1999 2000 （Point） (3) Other factors (2) Substantialization factor (1) Software factor

Gap between The Indices of All Industries(final demand components) and Financial Statements Statistics of Corporations(difference in points)

（Note） Correlation coefficient: zero quarters (0.905), Financial Statements Statistics of Corporations by Industry lags behind The Indices of All Industries(final demand components) by one quarter (0.904)

Source: Financial Statements Statistics of Corporations by Industry (Ministry of Finance), Price Indexes Monthly (Bank of Japan), Construction Cost Deflator/Input-output Table for analyzing the construction sector, 1995 (Ministry of Land, Infrastructure and Transport), The Indices of All Industries(final demand components)

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(4) Trends in Export and Import

① Outline of Export and Import

Considering trends in exports and imports for the first Quarter of 2001, exports decreased by 1.8%, a decrease for the third consecutive quarter, owing to the decrease in exports of goods (mining and manufacturing industry) by 2.0% compared to the previous quarter for the third consecutive quarter and the decrease in receipt of services by 1.1% id. As for imports, though payment for services increased by 0.8% compared to the previous quarter for the second consecutive quarter, import of goods (mining and manufacturing industry) decreased by 3.0% id. for the first time in three quarters, resulting in a decrease by 2.2 % id. for the first time in three quarters.

Regionally speaking, although exports to the EU and ASEAN9 increased, exports to

the US and East Asia decreased. Although imports from the EU increased, imports from the US, ASEAN9 and East Asia decreased.

Trend in export (goods)

60 70 80 90 100 110 120 130 140 150 Ⅰ └ Ⅱ 8 Ⅲ 年 Ⅳ ┘ Ⅰ └ Ⅱ 9 Ⅲ 年 Ⅳ ┘ Ⅰ └ Ⅱ 10 Ⅲ 年 Ⅳ ┘ Ⅰ └ Ⅱ 11 Ⅲ 年 Ⅳ ┘ Ⅰ └ Ⅱ 12 Ⅲ 年 Ⅳ ┘ Ⅰ 13年

輸出計 US EU ASEAN9 East Asia

1996 1997 1998 1999 2000 2001 Total exports ▲ 14 ▲ 12 ▲ 10 ▲ 8 ▲ 6 ▲ 4 ▲ 2 0 2 4 6 8 10 12 Ⅱ 12 Ⅲ 年 Ⅳ ┘ Ⅰ 13年（％） US EU

ASEAN9 East Asia Others Total exports

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Trend in import (goods)

（Note）１. Shipment index destined for export by region is calculated by rearranging the foreign trade statistics into shipment index classifications and the import index by region is calculated by rearranging the foreign trade statistics into total supply index classifications.

２. Regional classifications are as follows:

ASEAN9: Singapore, Thailand, Malaysia, Brunei, Philippines, Indonesia, Vietnam, Laos, Myanmar

East Asia: Korea, China, Taiwan, Hong Kong

Middle East: Iran, Iraq, Bahrain, Saudi Arabia, Kuwait, Qatar, Oman, Israel, Jordan, Syria, Lebanon, UAE, Gaza, Yemen 80 100 120 140 160 180 Ⅰ └ Ⅱ 1996 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 1997 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 1998 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 1999 Ⅲ Ⅳ ┘ Ⅰ └ Ⅱ 2000 Ⅲ Ⅳ ┘ Ⅰ 2001 US EU ASEAN9 East Asia Middle East Total輸入計

import ▲ 6 ▲ 3 0 3 6 9 12 15 （％） Ⅱ 2000 Ⅲ Ⅳ ┘ Ⅰ 2001 US EU

ASEAN9 East Asia

Middle East Others

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② Characteristics of exports to the US

Exports to the US have been on a downward trend in line with the slowdown of the US economy in and after the last half of the last year, and decreased largely by 4.3% in this quarter compared to the previous quarter.

If we divide quantity of exports to the US into “passenger cars,” “IT-related items,” “IT-related production goods” and “others,” it can be seen that exports of “passenger cars” have been decreasing for three consecutive quarters in response to slowdown of the US demands. “IT-related items” had been consistently contributing to the decrease since the third quarter of 1998; however, their exports increased in this quarter for the second consecutive quarter. “IT-related production goods” have been reducing in contribution since the second half of 1997, and their exports decreased in this quarter for the second consecutive quarter. As for the items contained in “others,” their exports had been continuously contributing to the decrease since the fourth quarter of 1999. Although their exports increased once when switching control devices and electronic toys contributed to an increase in the fourth quarter of 2000, they decreased again in this quarter.

Analysis of degree of contribution of quantity of exports to the US compared to the previous quarter

（Note）Classification of items is as follows.

Passenger cars : general passenger cars, light/compact passenger cars

IT-related items : communication wire and power cables, optical fiber products for wires and cables, electrostatic indirect copying machines, digital color copying machines, key service units, facsimiles, electronic automatic exchange, digital transmission units, fixed communication devices, PHS and mobile telephones, base station communication devices, general purpose computers, mid-range computers, personal computers, external storage, input-output devices, terminal units

IT-related production goods: resisters, fixed capacitors, transformers, quartz oscillators, connectors, printed circuit boards, magnetic heads, Braun tubes for computers, silicone diodes, transistors, photoelectric transformation elements, linear semiconductor integrated circuits, bipolar semiconductor integrated circuits, metal oxide semiconductor integrated circuits (logic elements), metal oxide semiconductor integrated circuits (storage elements), hybrid integrated circuits, silicone wafers, alkali storage batteries, lithium batteries Source: Itemized Mining and Manufacturing Industry Shipment Table

▲ 15 ▲ 10 ▲ 5 0 5 10 15 Ⅰ └ Ⅱ 7 Ⅲ 年 Ⅳ ┘ Ⅰ └ Ⅱ 8 Ⅲ 年 Ⅳ ┘ Ⅰ └ Ⅱ 9 Ⅲ 年 Ⅳ ┘ Ⅰ └ Ⅱ 10 Ⅲ 年 Ⅳ ┘ Ⅰ └ Ⅱ 11 Ⅲ 年 Ⅳ ┘ Ⅰ └ Ⅱ 12 Ⅲ 年 Ⅳ ┘ Ⅰ IT-related production goods IT-related items Passenger cars Others Exports to the U.S.

（％）