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Released: Tuesday, May 15, 2012

The Conference Board Leading Economic Index® (LEI) for Japan increased 0.9 percent The Conference Board Coincident Economic Index® (CEI) decreased 0.1 percent in March.

  • The Conference Board LEI for Japan increased again in March. New orders for machinery and construction* made the largest positive contribution to the index, but this month’s gains were fairly widespread across all components. Between September 2011 and March 2012, the leading economic index increased by 3.3 percent (about a 6.7 percent annual rate), an improvement from the decline of 1.9 percent (about a -3.7 percent annual rate) for the previous six months. In addition, the strengths among the leading indicators have remained widespread in recent months. 
  • The Conference Board CEI for Japan, a measure of current economic activity, fell slightly in March as employment and the retail, wholesale, and manufacturing sales* component both declined. The coincident economic index increased by 0.9 percent (about a 1.9 percent annual rate) between September 2011 and March 2012, slower than the increase of 3.2 percent (about a 6.5 percent annual rate) for the previous six months. However, the strengths among the coincident indicators have been very widespread in recent months. Meanwhile, real GDP declined by 0.8 percent (annual rate) in the fourth quarter of 2011, following a 7.1 percent (annual rate) increase in the third quarter of the year.
  • The Conference Board LEI for Japan continued to improve through March and has returned to its pre-earthquake level reached in February 2011. The six-month growth of the index has also picked up as a result. Meanwhile, The Conference Board CEI for Japan declined slightly after three consecutive gains, and its six-month growth remains slower than the second half of last year. Taken together, the composite indexes and their components continue to suggest that the contraction of real GDP seen at the end of 2011 is likely to be temporary and economic activity is likely to pick up somewhat in the coming months.

LEADING INDICATORS.

Eight of the ten components that make up The Conference Board LEI for Japan increased in March.  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*, the (inverted) business failures, interest rate spread, the Tankan business conditions survey, stock prices, real money supply, the index of overtime worked, and the six month growth rate of labor productivity.  The negative contributors were dwelling units started and real operating profits*.    

With the increase of 0.9 percent in March, The Conference Board LEI for Japan now stands at 96.9 (2004=100).  Based on revised data, this index increased 0.8 percent in February and increased 0.1 percent in January.  During the six-month span through March, the index increased 3.3 percent, and nine of the ten components advanced (diffusion index, six-month span equals 95.0 percent).

COINCIDENT INDICATORS.

Two of the four components that make up The Conference Board CEI for Japan decreased in March. The positive contributors to the index include industrial production and wage and salary income.  Number of employed persons and the retail, wholesale, and manufacturing sales* component declined in March.

With the decrease of 0.1 percent in March, The Conference Board CEI for Japan now stands at 98.1 (2004=100).  Based on revised data, this index increased 0.2 percent in February and increased 0.4 percent in January.  During the six-month span through March, the index increased 0.9 percent, and all four components advanced (diffusion index, six-month span equals 100.0 percent).

DATA AVAILABILITY AND NOTES.

The data series used to computeThe 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 May 14, 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.

**According to The Statistics Bureau and the Director-General for Policy Planning of Japan, figures in the Number of Employed Persons series from the three regions (Iwate, Miyagi and Fukushima) affected by the March 11th earthquake were missing from March through August 2011.  From September 2011 on, this series again includes data for the whole of Japan. Thus, this series shows a sharp decline in March 2011 and a substantial gain in September 2011. 

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

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