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Released: Tuesday, April 5, 2011

The Conference Board Leading Economic Index®  (LEI) for Japan increased 1.0 percent and The Conference Board Coincident Economic Index®  (CEI) increased 0.4 percent in February.

  • The Conference Board LEI for Japan increased sharply again in February – the third consecutive monthly gain. The strengths among the leading indicators were also very widespread this month. With February’s increase, the six-month growth rate in the leading economic index has picked up – to 1.1 percent (a 2.3 percent annual rate) between August 2010 and February 2011, from 0.2 percent (a 0.4 percent annual rate) for the previous six months. Moreover, the strengths among the leading indicators became more widespread than the weaknesses in recent months. 
  • The Conference Board CEI for Japan, a measure of current economic activity, also increased in February. January’s large decline was revised to a moderate gain, due to a large upward revision in retail sales (a sub-index in the retail, wholesale, and manufacturing sales component).  With the increase in February, the six-month change in the coincident economic index has turned positive – to 0.7 percent (a 1.4 percent annual rate) in the period through February 2011, up from 0.1 percent (about a 0.2 percent annual rate) for the previous six months. Meanwhile, real GDP declined at a 1.3 percent annual rate in the fourth quarter of 2010, down from growth of 3.3 percent annual rate in the third quarter. 
  • The Conference Board LEI for Japan has risen for three consecutive months through February, after generally declining since the second quarter of 2010. Its six-month growth rate has also picked up in recent months. Meanwhile, The Conference Board CEI for Japan has also increased in the last three months through February, and its six-month growth rate has turned positive for the first time since August of last year. This release covers the period prior to the Tohoku earthquake and tsunami disasters. Prior to these incidents, the LEI was suggesting that the recovery was regaining some traction after a brief pause and that economic activity would improve modestly in the coming months.

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

With the increase of 1.0 percent in February, The Conference Board LEI for Japan now stands at 97.2 (2004=100).  Based on revised data, this index increased 1.2 percent in January and increased 0.3 percent in December.  During the six-month span through February, the index increased 1.1 percent, and seven of the ten components advanced (diffusion index, six-month span equals 70.0 percent).

COINCIDENT INDICATORS.  Three of the four components that make up The Conference Board CEI for Japan increased in February. The positive contributors to the index – in order from the largest positive contributor to the smallest – include number of employed persons, the retail, wholesale, and manufacturing sales* component, and industrial production.  Wage and salary income declined in February.

With the increase of 0.4 percent in February, The Conference Board CEI for Japan now stands at 99.2 (2004=100).  Based on revised data, this index increased 0.4 percent in January and increased 0.5 percent in December.  During the six-month span through February, the index increased 0.7 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 April 4, 2011.  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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