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Released: Tuesday, August 14, 2012

The Conference Board Leading Economic Index® (LEI) for Japan decreased 1.3 percent, while The Conference Board Coincident Economic Index®(CEI) increased 0.3 percent in June.

  • The Conference Board LEI for Japan fell in June for the third consecutive month, with new orders for machinery and construction, the six-month growth rate of labor productivity, dwelling units started, and the index of overtime worked making large negative contributions to the index. With this month’s decline, the six-month growth rate of the leading economic index continued to slow, contracting by 0.2 percent (about a -0.4 percent annual rate) during the first half of 2012, substantially down from the increase of 2.3 percent (about a 4.6 percent annual rate) for the second half of last year. However, the strengths among the leading indicators have remained slightly more widespread than the weaknesses in recent months. 
  • The Conference Board CEI for Japan, a measure of current economic activity, increased slightly in June. In the first half of this year, the coincident economic index increased by 0.8 percent (about a 1.6 percent annual rate), much slower than the increase of 3.1 percent (about a 6.2 percent annual rate) for the previous six months. Moreover, the strengths among the coincident indicators have been only balanced with the weaknesses over the last six months. Meanwhile, according to a preliminary estimate, Japan’s real GDP increased by 1.4 percent (annual rate) in the second quarter of 2012, down from 5.5 percent (annual rate) in the first quarter.
  • The Conference Board LEI for Japan has fallen for three months in a row, after increasing sharply in the first quarter of the year. As a result, the six-month change in the index has turned negative – the first time since September 2011. Meanwhile, The Conference Board CEI for Japan increased slightly in June following no growth in May and a small decline in April. The six-month growth in the index has slowed significantly from the second half of last year. Despite the recent declines in the LEI, the composite indexes and their components still suggest that economic activity is likely to continue expanding in the coming months, but at a relatively slow pace.

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

With the decrease of 1.3 percent in June, The Conference Board LEI for Japan now stands at 95.1 (2004=100).  Based on revised data, this index decreased 1.1 percent in May and decreased 0.2 percent in April.  During the six-month span through June, the index decreased 0.2 percent, and six of the ten components advanced (diffusion index, six-month span equals 60.0 percent).

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

With the increase of 0.3 percent in June, The Conference Board CEI for Japan now stands at 98.6 (2004=100).  Based on revised data, this index remained unchanged in May and declined 0.3 percent in April.  During the six-month span through June, 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 August 13, 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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