Aug. 6 (Bloomberg) -- The Bank of Japan is counting brothels in Hokkaido to help determine demand for services as the country battles its deepest post-War recession.

The number of sex parlors in the Susukino red-light district in Sapporo more than quadrupled in the past 20 years, according to a central bank report published yesterday. The survey of sex shops and restaurants was designed to better gauge demand for services, an area of the economy that’s becoming more important as exports slump.

“Any study into services is most welcome,” said Martin Schulz, senior economist at Fujitsu Research Institute in Tokyo. “We’ve got hundreds of studies on exports and manufacturing. What’s needed is creative thinking on services and if that includes brothels, so be it.”

Sapporo is the capital of Hokkaido, Japan’s northernmost island, where growth has lagged behind the national average. Even during the six years ending 2007, when Japan’s economy posted its longest expansion in postwar history, Hokkaido’s jobless rate exceeded the nationwide record of 5.5 percent

The bank commissioned the report, titled “Susukino, Recent Trends and Changes to a Pleasure District,” because the area is the heart of Hokkaido’s service industry, according to a BOJ official who declined to be identified, citing internal regulations. Most non-manufacturers in Japan are suffering in the recession, the official said. The report’s author wasn’t available for comment.

Brothel Count

Susukino covers an area about five times the size of the Tokyo Dome, home of the Yomiuri Giants baseball team. While the number of restaurants in the district fell 14 percent between 1989 and 2008, the number of brothels climbed to 264 shops from 63, the report showed.

“The number of brothels has increased. There’s no question about that,” Tadao Yonezawa, 66, an official at the Susukino Tourist Association, said in an interview. “It must be because people want those services. Where there’s demand, you get supply.”

While services including restaurants and retailing make up about 60 percent of gross domestic product, Japan’s economy has risen and fallen with the strength of its exports. The crash of overseas shipments following the bankruptcy of Lehman Brothers Holdings Inc. last September gave way to a recession that shrunk the economy to its 2003 size.

Susukino ranks among Japan’s top three pleasure districts, along with Kabukicho in Tokyo’s Shinjuku ward and Nakasu in the southwest city of Fukuoka, the report said. Under Japanese law, licensed shops operating in designated zones can openly offer services including oral sex, though intercourse is prohibited.

The Bank of Japan concluded its report by recommending that district planners consider ways to appeal to a broader segment of society, including women, in order to ensure the vitality of the area.

To contact the reporters on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.netJason Clenfield in Tokyo at jclenfield@bloomberg.net

Last Updated: August 6, 2009 02:20 EDT