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Released: Tuesday, August 9, 2011

The Conference Board Leading Economic Index ®(LEI) for Japan increased 0.1 percent and The Conference Board Coincident Economic Index (CEI) increased 0.7 percent in June.

  • The Conference Board LEI for Japan increased slightly in June – the first gain since February this year. The six-month growth rate of productivity and index of overtime worked in manufacturing made large positive contributions to the index this month, more than offsetting a sharp decline in new orders for machinery and construction*. Despite the small gain in June, the six-month change in the leading economic index continued to fall – to -1.0 percent (about a -2.1 percent annual rate) during the first half of this year, slightly slower than the 0.8 percent decline (about a -1.7 percent annual rate) during the second half of 2010. In addition, the weaknesses among the leading indicators have become slightly more widespread than the strengths over the last six months. 
  • The Conference Board CEI for Japan, a measure of current economic activity, also increased in June. Industrial production continued to rebound sharply, and all components in the index advanced this month. Still, the coincident economic index has fallen over the last six months, declining by 0.5 percent during this period (about a -1.0 percent annual rate), a slowdown from the 0.2 percent decline (about a -0.5 percent annual) for the previous six months. Meanwhile, real GDP declined sharply – at a 3.5 percent annual rate in the first quarter of 2011, following a 2.9 percent decline (annual rate) in the fourth quarter of last year.
  • The Conference Board LEI for Japan increased slightly in June for the first time since the March earthquake, but its six-month growth remained negative. Meanwhile, The Conference Board CEI for Japan has increased for two consecutive months, and its six-month decline has become smaller than in the previous three months. Taken together, the composite indexes and their components suggest that economic activity will remain weak in the near term, although the weakness could become more moderate.

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

With the increase of 0.1 percent in June, The Conference Board LEI for Japan now stands at 94.3 (2004=100). Based on revised data, this index decreased 0.4 percent in May and decreased 2.0 percent in April. During the six-month span through June, the index decreased 1.0 percent, and four of the ten components advanced (diffusion index, six-month span equals 45.0 percent).

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

With the increase of 0.7 percent in June, The Conference Board CEI for Japan now stands at 98.1 (2004=100). Based on revised data, this index increased 0.7 percent in May and decreased 0.2 percent in April. During the six-month span through June, the index decreased 0.5 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 August 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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