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Released: Tuesday, September 11, 2012

The Conference Board Leading Economic Index®  (LEI) for Japan decreased 0.8 percent and The Conference Board Coincident Economic Index®  (CEI) decreased 0.3 percent in July.

  • The Conference Board LEI for Japan fell again in July for the fourth consecutive month, with the index of overtime worked, the six-month growth rate of labor productivity, and stock prices making the largest negative contributions to the index. With this month’s decline, the six-month growth rate of the leading economic index continues to slow, contracting by 1.0 percent (about a -2.1 percent annual rate) between January and July 2012, a reversal from the increase of 1.4 percent (about a 2.8 percent annual rate) for the previous six months. Moreover, the weaknesses among the leading indicators have become slightly more widespread than the strengths in the last six months. 
  • The Conference Board CEI for Japan, a measure of current economic activity, also declined in July. Between January and July 2012, the coincident economic index contracted by 1.4 percent (about a 2.8 percent annual rate), a large turnaround from the increase of 3.4 percent (about a 6.9 percent annual rate) for the previous six months. However, the strengths and weaknesses among the coincident indicators were balanced during the last six months. Meanwhile, Japan’s real GDP increased by 1.4 percent (annual rate) in the second quarter of 2012, down from a 5.5 percent increase (annual rate) in the first quarter.
  • The Conference Board LEI for Japan has declined sharply in the last four months after increasing in the first quarter of the year. As a result, the six-month change in the index has turned negative for the first time since September 2011. At the same time, The Conference Board CEI for Japan also decreased in July, and has declined in four of the last six months. The six-month growth rate for the index also turned negative in July. Taken together, the composite indexes and their components suggest that economic activity is likely to expand more slowly, if at all, in the near term.

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

With the decrease of 0.8 percent in July, The Conference Board LEI for Japan now stands at 94.5 (2004=100).  Based on revised data, this index declined 1.5 percent in June and decreased 1.0 percent in May.  During the six-month span through July, the index decreased 1.0 percent, and four of the ten components advanced (diffusion index, six-month span equals 40.0 percent).

COINCIDENT INDICATORS. Only one of the four components that make up The Conference Board CEI for Japan increased in July. The positive contributor to the index was wage and salary income. The retail, wholesale, and manufacturing sales* component, industrial production, and number of employed persons declined in July.

With the decrease of 0.3 percent in July, The Conference Board CEI for Japan now stands at 96.6 (2004=100).  Based on revised data, this index increased 0.1 percent in June and decreased 0.5 percent in May.  During the six-month span through July, the index declined 1.4 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 September 10, 2012.  Some series are estimated as noted below.

NOTE: Beginning with this release, several data series in both The Conference Board Leading Economic Index® (LEI) and The Conference Board Coincident Economic Index® (CEI) for Japan will now be provided by Haver Analytics. As a result, some data series have been revised, but these changes do not affect the overall cyclical properties of the indexes.  For more information about these changes please contact indicators@conferenceboard.org.

* 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.

For more information, visit The Conference Board website:
http://www.conference-board.org/data/bci.cfm

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

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