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Released: Tuesday, April 17, 2012

The Conference Board Leading Economic Index® (LEI) for Japan increased 1.2 percent and The Conference Board Coincident Economic Index® (CEI) increased 0.6 percent in February.

  • The Conference Board LEI for Japan increased sharply in February, but the small gains in the previous two months were revised down to no change as a result of downward revisions to the index of overtime worked for those months.  Stock prices, dwelling units started, and the index of overtime worked made large positive contributions to the index this month.  With this month’s gain, the six-month growth rate of the leading economic index continued to pick up, to 2.0 percent (about a 4.1 percent annual rate) between August 2011 and February 2012, a reversal from the decline of 2.6 percent (about a -5.1 percent annual rate) for the previous six months. In addition, the strengths among the leading indicators have remained widespread in recent months.
  • The Conference Board CEI for Japan, a measure of current economic activity, also increased in February. All components except industrial production improved from last month.  With this month’s gain, the coincident economic index increased by 4.0 percent (about an 8.2 percent annual rate) between August 2011 and February 2012, a reversal from the decline of 4.4 percent (about a -8.7 percent annual rate) for the previous six months. Meanwhile, real GDP growth declined by 0.8 percent (annual rate) in the fourth quarter of 2011, following a 7.1 percent (annual rate) increase in the third quarter of the year.
  • The Conference Board LEI for Japan has improved since the last quarter of 2011, with most components rising during this period. Meanwhile, the rate of growth in The Conference Board CEI for Japan has also picked up, but the index remains below its most recent peak reached in February 2011. Taken together, the composite indexes and their components continue to suggest that the contraction of real GDP at the end of 2011 is unlikely to continue and economic activity should improve in the coming months.

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

With the increase of 1.2 percent in February, The Conference Board LEI for Japan now stands at 96.1 (2004=100).  Based on revised data, this index remained unchanged in both January and December.  During the six-month span through February, the index increased 2.0 percent, and eight of the ten components advanced (diffusion index, six-month span equals 80.0 percent).

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

With the increase of 0.6 percent in February, The Conference Board CEI for Japan now stands at 98.8 (2004=100).  Based on revised data, this index increased 0.5 percent in January and increased 0.3 percent in December.  During the six-month span through February, the index increased 4.0 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 April 16, 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 and new orders for machinery.  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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