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Released: Thursday, July 8, 2010

The Conference Board Leading Economic Index®  (LEI) for Japan decreased 0.6 percent and The Conference Board Coincident Economic Index®  (CEI) decreased 0.4 percent in May.

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  •  The Conference Board LEI for Japan declined for the second consecutive month in May.  Stock prices, the six-month growth rate of labor productivity, and new orders for machinery and construction all fell sharply this month. With the decline in May, the six-month growth rate in the leading economic index continued to moderate -- to 7.0 percent (a 14.5 percent annual rate) from November 2009 to May 2010, substantially down from 17.9 percent (about a 39.0 percent annual rate) in the previous six months. Nevertheless, the strengths among the leading indicators have remained very widespread in recent months. 
  • The Conference Board CEI for Japan also fell in May, and all its components declined this month. With this month’s decrease, the growth rate of the coincident economic index has slowed to 1.8 percent (a 3.6 percent annual rate) in the six-month period through May 2010, down from 2.5 percent (about a 5.2 percent annual rate) for the previous six months. At the same time, real GDP increased by 5.0 percent (annual rate) in the first quarter of 2010, up from 4.6 percent (annual rate) in the fourth quarter and 0.4 percent (annual rate) in the third quarter of 2009.
  • The Conference Board LEI for Japan has now declined for two consecutive months, and its six-month growth rate has continued to slow. In addition, growth in The Conference Board CEI for Japan has also slowed in recent months. Taken together, the behavior of the composite indexes suggests that the economy will continue to recover, but the pace of the recovery will likely be modest in the near term.

LEADING INDICATORS.  Six of the ten components that make up The Conference Board LEI for Japan increased in May.  The positive contributors to the index – in order from the largest positive contributor to the smallest – include the Tankan business conditions survey, the interest rate spread, real money supply, the index of overtime worked, dwelling units started, and real operating profits*.  The negative contributors – in order from the largest negative contributor to the smallest – include stock prices, the six-month growth rate of labor productivity, the new orders for machinery and construction component*, and the (inverted) business failures* .    

With the decrease of 0.6 percent in May, The Conference Board LEI for Japan now stands at 102.2 (2004=100).  Based on revised data, this index decreased 0.1 percent in April and increased 2.4 percent in March.  During the six-month span through May, the index increased 7.0 percent, and nine of the ten components advanced (diffusion index, six-month span equals 90.0 percent).

 

COINCIDENT INDICATORS.  All four components that make up The Conference Board CEI for Japan decreased in May. The negative contributors to the index – in order from the largest negative contributor to the smallest – include number of employed persons, wage and salary income, the real retail, wholesale, and manufacturing sales* component, and industrial production.

 

With the decrease of 0.4 percent in May, The Conference Board CEI for Japan now stands at 98.3 (2004=100).  Based on revised data, this index increased 0.2 percent in both April and March.  During the six-month span through May, the index increased 1.8 percent, and three of the four components advanced (diffusion index, six-month span equals 75.0 percent).

 

DATA AVAILABILITY AND NOTES.  The data series used to compute The Conference Board Leading Economic Index®  (LEI) for Japan and The Conference Board Coincident Economic Index® (CEI) for Japan reported in this release are those available “as of” 5:00 P.M. ET July 7, 2010.  Some series are estimated as noted below.

 

* The series in The Conference Board LEI that are based on our estimates are real operating profits and new orders for machinery.  The series in The Conference Board CEI that is based on our estimates is real manufacturing sales.

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

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