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Released: Tuesday, February 14, 2012

The Conference Board Leading Economic Index®  (LEI) for Japan increased 0.1 percent and The Conference Board Coincident Economic Index®  (CEI) increased 0.4 percent in December.

 

  • The Conference Board LEI for Japan increased slightly in December following no change in November. Large gains in the index of overtime worked and the six-month growth rate of productivity more than offset negative contributions from new orders for machinery and construction and dwelling units started.  The six-month growth rate of the leading economic index increased by 1.8 percent (about a 3.7 percent annual rate) in the second half of 2011, a reversal from the decline of 2.0 percent (about a -4.0 percent annual rate) for the previous six months. In addition, the strengths among the leading indicators have been more widespread than the weaknesses in recent months. 
  • The Conference Board CEI for Japan, a measure of current economic activity, also increased in December, driven by a large gain in industrial production.  The coincident economic index increased by 3.3 percent (about a 6.6 percent annual rate) between June and December of 2011, a reversal from the decline of 3.9 percent (about a -7.6 percent annual rate) during the first half of the year. Meanwhile, real GDP growth also picked up sharply in the third quarter of 2011, to 5.6 percent (annual rate), following a 2.0 percent contraction in the second quarter and a 6.6 percent contraction in the first quarter.
  • The Conference Board LEI for Japan continued its slightly upward trend through the end of 2011, after falling sharply in the first half of the year following the March 11 earthquake. Additionally, the six-month growth rate in the index has been in positive territory for the past three months. Meanwhile, the rate of growth in The Conference Board CEI for Japan has also recovered, but the index is still well below its most recent peak reached in the beginning of 2011. Taken together, the composite indexes and their components suggest that despite near term risks, economic activity should continue increasing in the coming months. 

LEADING INDICATORS.  Five of the ten components that make up The Conference Board LEI for Japan increased in December.  The positive contributors to the index – in order from the largest positive contributor to the smallest – include the index of overtime worked, the six month growth rate of labor productivity, interest rate spread, the (inverted) business failures, 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, dwelling units started, the Tankan business conditions survey, and real money supply.  Stock prices remained unchanged in December.

With the increase of 0.1 percent in December, The Conference Board LEI for Japan now stands at 94.9 (2004=100).  Based on revised data, this index remained unchanged in November and increased 1.2 percent in October.  During the six-month span through December, the index increased 1.8 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 December. The positive contributors to the index include industrial production and the retail, wholesale, and manufacturing sales* component.  Wage and salary income and number of employed persons declined in December.

With the increase of 0.4 percent in December, The Conference Board CEI for Japan now stands at 98.0 (2004=100).  Based on revised data, this index decreased 0.2 percent in November and increased 0.4 percent in October.  During the six-month span through December, the index increased 3.3 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 February 10, 2012.  Some series are estimated as noted below.

* The series in The Conference Board LEI that are based on our estimates are real operating profits.  The series in The Conference Board CEI that is based on our estimates is real 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. 

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

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