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Released: Tuesday, July 10, 2012

The Conference Board Leading Economic Index® (LEI) for Japan decreased 1.1 percent, and The Conference Board Coincident Economic Index® (CEI) remained unchanged in May.

  • The Conference Board LEI for Japan fell again in May following a small decline in April, with the stock price index, new orders for machinery and construction, the index of overtime worked, and six-month growth rate of labor productivity making the largest negative contributions to the index. With this month’s decline, the six-month growth rate of the leading economic index slowed to 1.3 percent (about a 2.5 percent annual rate) between November 2011 and May 2012, down from the 2.7 percent growth (about a 5.5 percent annual rate) for the previous six months. However, the strengths among the leading indicators have remained widespread in recent months. 
  • The Conference Board CEI for Japan, a measure of current economic activity, was unchanged in May. Between November 2011 and May 2012, the coincident economic index increased by 0.8 percent (about a 1.6 percent annual rate), much slower than the increase of 3.6 percent (about a 7.4 percent annual rate) for the previous six months. The strengths and weaknesses among the coincident indicators have been balanced over the last six months. Meanwhile, real GDP increased sharply, by 4.7 percent (annual rate) in the first quarter of 2012, a large increase over the revised 0.1 percent increase (annual rate) in the fourth quarter of 2011.
  • The Conference Board LEI for Japan fell in both May and April after increasing sharply in the first quarter of the year, and its six-month growth rate has moderated from the second half of last year. Meanwhile, The Conference Board CEI for Japan was unchanged in May after a small decline in April, and its six-month growth also has slowed from the second half of last year. Taken together, the composite indexes and their components suggest that although the economy will continue expanding, the pace of growth is likely to moderate in the coming months.

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

With the decrease of 1.1 percent in May, The Conference Board LEI for Japan now stands at 96.4 (2004=100).  Based on revised data, this index decreased 0.2 percent in April and increased 1.1 percent in March.  During the six-month span through May, the index increased 1.3 percent, and seven of the ten components advanced (diffusion index, six-month span equals 70.0 percent).

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

After remaining unchanged in May, The Conference Board CEI for Japan now stands at 98.3 (2004=100).  Based on revised data, this index decreased 0.3 percent in April and increased 0.1 percent in March.  During the six-month span through May, the index increased 0.8 percent, and two of the four components advanced (diffusion index, six-month span equals 50.0 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 July 9, 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.

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

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