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Released: Thursday, October 6, 2011

The Conference Board Leading Economic Index®  (LEI) for Japan decreased 0.4 percent The Conference Board Coincident Economic Index®  (CEI) remained unchanged in August.

  • The Conference Board LEI for Japan fell in August following two consecutive gains, and the weaknesses among its components were widespread. Stock prices, real operating profits*, and the (inverted) business failures made the largest negative contributions to the index this month. The six-month change in the leading economic index continued to slow – to -3.9 percent (about a -7.7 percent annual rate) through August 2011, significantly down from the 1.1 percent increase (about a 2.3 percent annual rate) for the previous six months. In addition, the weaknesses among the leading indicators have been more widespread than the strengths in recent months. 
  • The Conference Board CEI for Japan, a measure of current economic activity, was unchanged in August. A decline in employment was offset by gains from industrial production and wage and salary income.  After remaining unchanged in August, the six-month change in the coincident economic index stayed negative, falling by 2.7 percent (about a -5.4 percent annual rate) during the period through August, a sharp slowdown from the 0.9 percent increase (about a 1.8 percent annual rate) for the previous six months. Meanwhile, real GDP growth has been declining for three consecutive quarters, falling by 2.1 percent (annual rate, revised down from 1.3 percent) in the second quarter of 2011, following a 3.7 percent decline (annual rate) in the first quarter.
  • The Conference Board LEI for Japan resumed its downward trend in August after two consecutive gains, and its six-month growth continued to decline. Meanwhile, The Conference Board CEI for Japan was unchanged in August and has been essentially flat since the sharp one month decline that was the result of the March earthquake. Taken together, the composite indexes and their components suggest that economic activity will remain weak in the near term.

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

With the decrease of 0.4 percent in August, The Conference Board LEI for Japan now stands at 93.4 (2004=100).  Based on revised data, this index increased 0.8 percent in July and increased 0.1 percent in June.  During the six-month span through August, the index decreased 3.9 percent, and four of the ten components advanced (diffusion index, six-month span equals 40.0 percent).

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

After remaining unchanged in August, The Conference Board CEI for Japan now stands at 96.7 (2004=100).  Based on revised data, this index decreased 0.4 percent in July and increased 0.5 percent in June.  During the six-month span through August, the index decreased 2.7 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 October 5, 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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