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Benchmark Revisions - November 2006

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Released: Tuesday, December 6, 2011

Next month's release will incorporate annual benchmark revisions to the composite indexes. These regular benchmark revisions bring the indexes up-to-date with revisions in the source data. The revisions do not change the cyclical properties of the indexes. The indexes are updated throughout the year, but only for the previous six months. Data revisions that fall outside of the moving six-month window are incorporated when the benchmark revision is made and the entire histories of the indexes are recomputed. As a result, the revised indexes and their month-over-month changes will no longer be directly comparable to those issued prior to the benchmark revision.

 

The Conference Board Leading Economic Index®  (LEI) for Japan decreased 1.1 percent The Conference Board Coincident Economic Index®  (CEI) increased 0.3 percent in October.

  • The Conference Board LEI for Japan picked up sharply in October, and there were large upward revisions to the index to the previous four months, as actual data for operating profits* for the third quarter became available. In October, the business failures (inverted), the Tankan business conditions
    index, yield spread, and dwelling units started all contributed positively to the index. With this month's gain, the leading economic index increased by 1.5 percent (about a 3.0 percent annual rate) between April and October this year, a reversal from the decline of 1.4 percent (about a -2.7 percent annual rate) for the previous six months. In addition, the strengths and weaknesses among the leading indicators have become balanced in the last six months.
  • The Conference Board CEI for Japan, a measure of current economic activity, also increased in October. Industrial production gained sharply, and the retail, wholesale, and manufacturing sales* component also increased this month. With the gain in October, the six-month growth rate in the coincident economic index continued to pick up, to 4.3 percent (about an 8.7 percent annual rate), significantly up from the decline of 1.8 percent (about a -3.6 percent annual rate) between October 2010 and April 2011. Meanwhile, real GDP growth also picked up sharply in the third quarter this year, to 6.0 percent (annual rate), following a 1.3 percent contraction in the second quarter and a 2.7 percent contraction in the first quarter this year.
  • The Conference Board LEI for Japan has been fluctuating around a downward trend that started in March last year. However, in the last several months the LEI has rebounded, and its six-month growth rate has returned to positive territory. Meanwhile, the rate of growth in The Conference Board CEI for Japan has also picked up in the last six months as the impact of the natural disasters wanes. Taken together, the composite indexes and their components suggest that although near term risks to economic growth remain, economic activity should continue increasing in the coming months.

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

With the increase of 1.1 percent in October, The Conference Board LEI for Japan now stands at 95.2 (2004=100). Based on revised data, this index decreased 0.4 percent in September and increased 0.1 percent in August. During the six-month span through October, the index increased 1.5 percent, and five of the ten components advanced (diffusion index, six-month span equals 50.0 percent).

COINCIDENT INDICATORS.  Two of the four components that make up The Conference Board CEI for Japan increased in October. 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. Number of employed persons** and wage and salary income remained unchanged in October.

With the increase of 0.3 percent in October, The Conference Board CEI for Japan now stands at 100.3 (2004=100). Based on revised data, this index increased 2.6 percent in September and increased 0.2 percent in August. During the six-month span through October, the index increased 4.3 percent, and all four components advanced (diffusion index, six-month span equals 100.0 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 December 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 and construction.  The series in The Conference Board CEI that is based on our estimates is real retail, wholesale and manufacturing sales.
**According to The Statistics Bureau and the Director-General for Policy Planning of Japan, figures in the Number of Employed Persons series from the three regions (Iwate, Miyagi and Fukushima) affected by the March 11th earthquake were missing from March through August 2011. From September 2011 on, this series again includes data for the whole of Japan. Thus, this series shows a sharp decline in March 2011 and a substantial gain in September 2011. 2011

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

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