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Benchmark Revisions - November 2006

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Released: Thursday, October 9, 2003

The Conference Board reports today that the leading index for Japan increased 0.4 percent and the coincident index decreased 0.1 percent in August.

  • The leading index increased for the fourth consecutive month in August. The recent strength in the leading index continues to be widespread, as indicated by an 80.0 percent level of the six-month diffusion index.
  • The coincident index, a measure of current economic activity, decreased slightly in August. However, the coincident index has been fluctuating around a gradually rising trend over the past year.
  • The leading index is signaling some strengthening of economic growth in the near term, and real GDP growth has already picked up to a 3.4 percent rate in the second quarter from about 2.5 percent in the previous two quarters. If the leading index continues to increase at the same rate as over the last four months (6-7 percent annual rate), then this would signal a further strengthening of real GDP growth in the near term.

Leading Indicators. Six of the ten components that make up the leading index increased in August. The positive contributors to the index – in order from the largest positive contributor to the smallest – include (inverted) business failures, yield spread, real money supply, index of overtime worked, the Tankan business conditions survey, stock prices. Four components decreased in August. The negative contributors to the index – in order from the largest negative contributor to the smallest – include dwelling units started, the six month growth rate of labor productivity*, new orders for machinery and construction*, and real operating profits*.

With an increase of 0.4 percent in August, the leading index now stands at 92.9 (1990=100). Based on revised data, this index increased 0.5 percent in July and increased 0.7 percent in June. During the six-month span through August, the index increased 2.0 percent, and eight of the ten components advanced (diffusion index, six-month span equals 80.0 percent).

Coincident Indicators. Three of the six components that make up the coincident index increased in August. The positive contributors to the index – in order from the largest positive contributor to the smallest – include real retail sales, wage and salary income*, and real manufacturing sales*. Three components declined in August. The negative contributors to the index – in order from the largest negative contributor to the smallest – include number of employed persons, and real wholesale sales, and industrial production.

With a 0.1 percent decrease in August, the coincident index now stands at 101.8 (1990=100). Based on revised data, this index decreased 0.3 percent in July and decreased 0.1 percent in June. During the six-month span through August, the index increased 0.1 percent, and two of the six components advanced (diffusion index, six-month span equals 41.7 percent).

Data Availability. The data series used to compute the two composite indexes reported in this release are those available “as of” 5:00 P.M. ET October 7, 2003. Some series are estimated as noted below.

*Notes: The series in the leading index that are based on The Conference Board estimates are real operating profits, the six-month growth rate of labor productivity, and new orders for machinery and construction. The series in the coincident index that are based on The Conference Board estimates are real manufacturing sales and wage and salary income.

THESE DATA ARE FOR ANALYSIS PURPOSES ONLY. NOT FOR REDISTRIBUTION, PUBLISHING, DATABASING, OR PUBLIC POSTING WITHOUT EXPRESS WRITTEN PERMISSION.

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