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Released: Tuesday, March 8, 2011

The Conference Board Leading Economic Index®  (LEI) for Japan increased 1.3 percent while The Conference Board Coincident Economic Index®  (CEI) decreased 0.9 percent in January.

  • The Conference Board LEI for Japan increased sharply in January, following a small gain in December, and the strengths among the leading indicators were widespread. Index levels were revised modestly higher for the past several months, as data for real operating profits for the fourth quarter became available. With the large increase in January, the six-month change in the Leading Economic Index turned positive – it increased by 0.2 percent (a 0.4 percent annual rate) in the period through January 2011. Still, the increase is lower than the growth of 0.9 percent (a 1.9 percent annual rate) for the previous six months. However, the strengths among the leading indicators became much more widespread than the weaknesses in recent months. 
  • The Conference Board CEI for Japan, a measure of current economic activity, declined in January, following an increase in December. A large negative contribution from the retail, wholesale, and manufacturing sales component more than offset the positive contributions from industrial production and employment. With the decline in January, the six-month change in the Coincident Economic Index remains negative – at -1.3 percent (a -2.6 percent annual rate) between July 2010 and January 2011, down from 0.1 percent (about a 0.2 percent annual rate) for the previous six months. Meanwhile, real GDP declined at a 1.1 percent annual rate in the fourth quarter of 2010, down from growth of 3.3 percent annual rate in the third quarter. 
  • The Conference Board LEI for Japan increased in both December and January, after generally declining since the second quarter of 2010. Its six-month growth rate has also turned positive for the first time since August last year. Meanwhile, The Conference Board CEI for Japan declined in January, and its six-month growth rate remains negative. Taken together, the behavior of the composite indexes suggests that economic activity will likely remain weak in the coming months.

 

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

With the increase of 1.3 percent in January, The Conference Board LEI for Japan now stands at 96.2 (2004=100).  Based on revised data, this index increased 0.2 percent in December and decreased 0.2 percent in November.  During the six-month span through January, the index increased 0.2 percent, and nine of the ten components advanced (diffusion index, six-month span equals 90.0 percent).

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

With the decrease of 0.9 percent in January, The Conference Board CEI for Japan now stands at 97.5 (2004=100).  Based on revised data, this index increased 0.5 percent in December and remained unchanged in November.  During the six-month span through January, the index decreased 1.3 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 March 7, 2011.  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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