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Released: Tuesday, December 10, 2013

The Conference Board Leading Economic Index®  (LEI) for Japan increased 0.2 percent, and The Conference Board Coincident Economic Index®  (CEI) increased 0.1 percent in October.

  • The Conference Board LEI for Japan increased again in October. The largest positive contributions to index came from new orders for machinery and construction, real money supply, and (inverted) business failures. With October’s improvement, the leading economic index has increased by 3.5 percent (about a 7.1 percent annual rate) from April to October 2013, down from 5.7 percent (an 11.6 percent annual rate) in the previous six months. However, the strengths among the leading indicators continued to be very widespread.
  • The Conference Board CEI for Japan also increased, and three of its four components improved this month. The six-month change in the index remains slightly negative, falling 0.1 percent (a ­−0.2 percent annual rate) between April and October 2013, although the weaknesses and strengths among the coincident indicators have been balanced in the last six months. At the same time, real GDP expanded at a 1 percent annual rate in the third quarter of 2013, slower than the 3.6 percent (annual rate) in the previous quarter.
  • The improvements in The Conference Board LEI for Japan have been persistent throughout 2013, but the rate at which the index is increasing has fallen off in the second half of this year. Taken together, the slowing pace of improvements in the LEI, coupled with slightly negative growth in the CEI in the last six months, suggest that the current expansion in economic activity is unlikely to pick up during the first half of 2014.

LEADING INDICATORS. Seven of the ten components that make up The Conference Board LEI for Japan increased in October. 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*, real money supply, the (inverted) business failures, the Tankan business conditions survey, interest rate spread, the index of overtime worked, and real operating profits*.  The negative contributors – in order from the largest negative contributor to the smallest – include the six month growth rate of labor productivity and dwelling units started.  Stock prices remained unchanged in October.

With the increase of 0.2 percent in October, The Conference Board LEI for Japan now stands at 100.6 (2004=100). Based on revised data, this index increased 1.3 percent in September and remained unchanged in August. During the six-month span through October, the index increased 3.5 percent, and all of the ten components advanced (diffusion index, six-month span equals 100.0 percent).

COINCIDENT INDICATORS. Three of the four components that make up The Conference Board CEI for Japan increased in October. The positive contributors to the index – in order from the largest positive contributor to the smallest – include number of employed persons, wage and salary income, and industrial production. Real Retail, Wholesale, and Manufacturing Sales remained unchanged in October.

With the increase of 0.1 percent in October, The Conference Board CEI for Japan now stands at 96.8 (2004=100). Based on revised data, this index increased 0.2 percent in September and decreased 0.2 percent in August. During the six-month span through October, the index fell 0.1 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” 10:00 A.M. ET December 9, 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.

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

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