(Bloomberg) -- The Bank of Japan delivered the most wide-ranging upgrade of its regional economic assessment in seven years amid continued signs of improvement in activity from the depths of the Covid-19 slump.
The central bank improved its view on eight of Japan's nine regions in its quarterly Sakura report, the equivalent of the Federal Reserve's Beige Book survey. The less pessimistic tone of the latest report is likely to be reflected in a quarterly outlook released by the BOJ later this month along with its policy statement.
Separate reports Thursday showed the mood among Japanese merchants improved last month to the least pessimistic in almost two and a half years, while bankruptcies in the first half of year dropped to the lowest level in 31 years, as government and central bank support helped prop up struggling firms.
Bankruptcies in Japan Fall to Three-Decade Low Amid Stimulus
Relatively better data across the board bodes well for new Prime Minister Yoshihide Suga as he tries to ensure a recovery from the economy's record collapse in the April-June quarter. BOJ Governor Haruhiko Kuroda earlier Thursday warned he sees the economy improving only at a moderate pace as long as the virus weighs on activity.
Most regions surveyed by the BOJ reported that activity had started to pick up or were showing signs of it, with economic activity resuming gradually, even as conditions remained severe due to the virus.
The major industrial areas around Tokyo, Osaka and Nagoya all showed some improvement. Shikoku, an island in western Japan, was the only area that didn't.
Still, the improved assessment of conditions was from a very gloomy base. Three months ago, after a nationwide state of emergency over the pandemic, the bank downgraded its view on all nine regions.
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