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Released: Tuesday, November 13, 2012

The Conference Board Leading Economic Index®  (LEI) for Japan decreased 0.4 percent and The Conference Board Coincident Economic Index®  (CEI) decreased 0.7 percent in September.

  • The Conference Board LEI for Japan fell in September for the sixth consecutive month. Sharp declines in the index of overtime worked and the six-month growth rate of labor productivity more than offset a large positive contribution from new orders for machinery and construction. With this month’s decline, the LEI contracted by 4.5 percent (about a -8.8 percent annual rate) between March and September 2012, a large reversal from the increase of 4.5 percent (about a 9.2 percent annual rate) for the previous six months. In addition, the weaknesses among the leading indicators have been widespread in recent months. 
  • The Conference Board CEI for Japan, a measure of current economic activity, also fell in September. Between March and September 2012, the coincident economic index contracted by 2.2 percent (about a -4.4 percent annual rate), down sharply from the increase of 0.8 percent (about a 1.7 percent annual rate) for the previous six months. Additionally, the weaknesses among the coincident indicators have remained widespread in the last six months. Meanwhile, Japan’s real GDP increased by a 0.7 percent rate (annual rate) in the second quarter of 2012, down from the increase of 5.3 percent (annual rate) in the first quarter.
  • The Conference Board LEI for Japan has been falling for the past six consecutive months, and is now at about the same level as April of last year, following the earthquake/tsunami disaster. At the same time, The Conference Board CEI for Japan also declined in September, its third consecutive decline, and its six-month change remains negative. Taken together, the composite indexes and their components suggest that the rate of economic growth is likely to remain very slow in the near term, and that the risk of an economic downturn continues to rise.

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

With the decrease of 0.4 percent in September, The Conference Board LEI for Japan now stands at 93.6 (2004=100).  Based on revised data, this index decreased 0.5 percent in August and decreased 0.9 percent in July.  During the six-month span through September, the index decreased 4.5 percent, and three of the ten components advanced (diffusion index, six-month span equals 30.0 percent).

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

With the decrease of 0.7 percent in September, The Conference Board CEI for Japan now stands at 95.8 (2004=100).  Based on revised data, this index decreased 0.1 percent in August and decreased 0.3 percent in July.  During the six-month span through September, the index decreased 2.2 percent, and only one of the four components advanced (diffusion index, six-month span equals 37.5 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 November 12, 2012.  Some series are estimated as noted below.

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