Global Business Cycle Indicators
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Released: Thursday, August 7, 2014
The Conference Board Leading Economic Index® (LEI) for Japan decreased 0.5 percent and The Conference Board Coincident Economic Index® (CEI) decreased 0.5 percent in June.
- The Conference Board LEI for Japan fell for the fourth consecutive month in June. Business failures, the six-month growth rate of labor productivity and the index of overtime worked made the largest negative contributions to the index this month. With June’s decline, the leading economic index has fallen by 2.2 percent (about a -4.3 percent annual rate) in the first half of 2014, a reversal from the growth of 3.0 percent (about a 6.0 percent annual rate) in the second half of last year. Moreover, the weaknesses among the leading indicators have become very widespread.
- The Conference Board CEI for Japan, a measure of current economic activity, also declined in June, and with the exception of employment, all of its components decreased. The six-month growth rate of the coincident economic index contracted by 1.0 percent (about a -2.0 percent annual rate), slower than its growth of 0.6 percent (about a 1.2 percent annual rate). In addition, the strengths among the coincident indicators have become less widespread and were only balanced with the weaknesses in the first half of this year. At the same time, real GDP expanded at a 6.7 percent annual rate in the first quarter of 2014, after 0.3 percent (annual rate) growth in the last quarter of 2013.
- The declines in both the LEI and CEI for Japan have become widespread and persistent in recent months, and the rate at which they are falling continued to accelerate through June. Taken together, the behavior of both indexes suggests that the impressive growth in the first quarter is not sustainable and the economy will slow considerably in the second half of 2014.
LEADING INDICATORS. Six 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 new orders for machinery and construction component*, stock prices, the Tankan business conditions survey, the interest rate spread, dwelling units started, and real operating profits*. The negative contributors – in order from the largest negative contributor to the smallest – include (inverted) business failures, the six-month growth rate of labor productivity, and the index of overtime worked. Real money supply remained unchanged in June.
With the decrease of 0.5 percent in June, The Conference Board LEI for Japan now stands at 99.0 (2004=100). Based on revised data, this index decreased 1.1 percent in May and decreased 0.1 percent in April. During the six-month span through June, the index decreased 2.2 percent, and three of the ten components advanced (diffusion index, six-month span equals 30.0 percent).
COINCIDENT INDICATORS. None of the four components that make up The Conference Board CEI for Japan increased in June. The negative contributors to the index – in order from the largest negative contributor to the smallest – include industrial production, wage and salary income and the retail, wholesale, and manufacturing sales component*. Employed persons held steady in June.
With the decrease of 0.5 percent in June, The Conference Board CEI for Japan now stands at 95.7 (2004=100). Based on revised data, this index increased 0.3 percent in May and decreased 1.5 percent in April. During the six-month span through June, the index decreased 1.0 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 6, 2014. Some series are estimated as noted below.
* The series in The Conference Board LEI that are based on our estimates are the six month growth rate of labor productivity, 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.
Professional Contacts at The Conference Board:
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1 212 339 0257
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