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Global Business Cycle Indicators

Japan

Press Release Archive

Released: Thursday, November 6, 2014

The Conference Board Leading Economic Index® (LEI) for Japan increased 0.3 percent and The Conference Board Coincident Economic Index® (CEI) increased 0.4 percent in September.

  • The Conference Board LEI for Japan increased again in September. The large positive contribution from business failures more than offset negative contributions from the six-month growth rate of labor productivity, new orders for machinery and construction, and the Tankan business conditions survey. Despite this month’s improvement, the leading economic index fell 2.7 percent (about a −5.3 percent annual rate) between March and September 2014, a reversal from its slight growth of 0.2 (about 0.4 percent annual rate) over the previous six months. The strengths and weaknesses among the leading indicators have been balanced in recent months.
  • The Conference Board CEI for Japan, a measure of current economic activity, also increased in September. Industrial production as well as real retail, wholesale, and manufacturing sales made the largest positive contributions to the coincident economic index. Despite the increase, the six-month growth rate for the period ending in September 2014 remains negative at −2.0 percent (about a −3.9 percent annual rate), which is down substantially from the growth of 0.9 percent (about a 1.9 percent annual rate) over the previous six months. At the same time, real GDP contracted at a 7.1 percent annual rate in the second quarter, after expanding 6.0 percent (annual rate) in the first quarter of the year.
  • The Conference Board LEI and The Conference Board CEI for Japan increased in September, and the strengths in their components have become more widespread. While the six-month change in the LEI remains negative, it has improved in recent months. The six month growth rate of the CEI also remains negative, but the rate of decline has held steady over the past few months. Taken together, the behavior of both indexes suggests, that economic activity is likely to expand at a moderate pace in the months to come.

LEADING INDICATORS. Four 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—were (inverted) business failures, stock prices, the index of overtime worked, real money supply, and the interest rate spread. The negative contributors—in order from the largest negative contributor to the smallest—were the six month growth rate of labor productivity, the new orders for machinery and construction component*, the Tankan business conditions survey and real operating profits*. Dwelling units started remained unchanged in September.

With the increase of 0.3 percent in September, The Conference Board LEI for Japan now stands at 97.8 (2004=100). Based on revised data, this index increased 0.1 percent in August and decreased 0.9 percent in July. During the six-month span through September, the index decreased 2.7 percent, and five of the ten components advanced (diffusion index, six-month span equals 50.0 percent).

COINCIDENT INDICATORS. Three of the four components that make up The Conference Board CEI for Japan increased in September. The positive contributors to the index—in order from the largest positive contributor to the smallest—include industrial production; retail, wholesale, and manufacturing sales*; and number of employed persons. Wage and salary income declined in September.

With the increase of 0.4 percent in September, The Conference Board CEI for Japan now stands at 95.3 (2004=100). Based on revised data, this index decreased 0.2 percent in August and decreased 0.1 percent in July. During the six-month span through September, the index decreased 2.0 percent, and one of the four components advanced (diffusion index, six-month span equals 25.0 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 November 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.

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

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