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Released: Thursday, June 9, 2011

To read The Conference Board report on Assessing the Risks of An Economic Downturn in Japan:

https://www.conference-board.org/publications/publicationdetail.cfm?publicationid=1934

The Conference Board Leading Economic Index® for Japan decreased 2.1 percent in April. The Conference Board Coincident Economic Index® decreased 0.3 percent in April.

  • The Conference Board LEI for Japan fell sharply in April, following a decline in March. The weaknesses among the leading indicators continued to be widespread – the six-month growth rate of productivity, index of overtime worked, (inverted) business failures, stock prices, and new orders for machinery and construction all contributed negatively to this month. With the decrease in April, the six-month change in the leading economic index turned negative again – to -0.7 percent (a -1.5 percent annual rate) between October 2010 and April 2011, after positive readings for the previous three months. Nevertheless, the strengths among the leading indicators were more widespread than the weaknesses over the six months through April.
  • The Conference Board CEI for Japan, a measure of current economic activity, also fell in April, following a large decline in March. Wage and salary income and number of employed persons continued to fall, while industrial production rebounded this month after falling substantially in March.  With the decrease in April, the six-month change of the coincident economic index stands at -1.1 percent (a -2.2 percent annual rate) in the period through April 2011, about the same rate for the previous six months. Meanwhile, real GDP declined sharply – at a 3.7 percent annual rate in the first quarter of 2011, following a 3.0 percent decline (annual rate) in the fourth quarter of last year.
  • The Conference Board LEI and The Conference Board CEI for Japan continued to decline through April, due mainly to the economic impact of the March 11 earthquake. As a result, the six-month growth rate of the leading economic index has returned to negative territory this month, and the six-month change in the coincident index remained below zero as well. Taken together, the composite indexes and their components suggest that economic activity will likely remain weak in the near term.

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

With the decrease of 2.1 percent in April, The Conference Board LEI for Japan now stands at 94.4 (2004=100). Based on revised data, this index decreased 0.7 percent in March and increased 0.8 percent in February.  During the six-month span through April, the index decreased 0.7 percent, and seven of the ten components advanced (diffusion index, six-month span equals 70.0 percent).

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

With the decrease of 0.3 percent in April The Conference Board CEI for Japan now stands at 96.9 (2004=100). Based on revised data, this index decreased 2.4 percent in March and increased 0.6 percent in February. During the six-month span through April the index decreased 1.1 percent, and one of the four components advanced (diffusion index, six-month span equals 25.0 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 June 8, 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.

 

To read The Conference Board report on Assessing the Risks of An Economic Downturn in Japan:

https://www.conference-board.org/publications/publicationdetail.cfm?publicationid=1934

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

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