Global Business Cycle Indicators

Japan

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Released: Monday, July 13, 2015

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

  • The Conference Board LEI for Japan declined slightly in May, after remaining unchanged in April. Negative contributions from the index of overtime worked, business failures and new orders for machinery and construction more than offset positive contributions from stock prices, real money supply and the Tankan business conditions survey. Between November 2014 and May 2015, the leading economic index contracted by 0.9 percent (about a −1.7 percent annual rate), a reversal from the increase of 0.5 percent (about a 1.0 percent annual rate) over the prior six months. However, the strengths among the leading indicators continue to be slightly more widespread than the weaknesses.
  • The Conference Board CEI for Japan, a measure of current economic activity, also edged down in May. The coincident economic index decreased 0.1 percent (about a −0.2 percent annual rate) during the six months ending in May 2015, after decreasing by 0.2 percent (about a −0.4 percent annual rate) over the preceding six months. The weaknesses among the coincident indicators have become more widespread than the strengths in recent months. At the same time, real GDP expanded by 3.9 percent (annual rate) in the first quarter of 2015, after expanding by 1.3 percent (annual rate) in the fourth quarter of 2014.
  • The Conference Board LEI for Japan declined slightly in May. As a result, its six-month growth rate has moved further into negative territory. The CEI has been on a gradual downward trend since the beginning of this year, and its six-month growth rate is only slightly more positive than the previous six months. Taken together, the recent behavior of both indexes suggests that the growth in economic activity should continue, but may lose some momentum in the short-term.

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

With the decrease of 0.1 percent in May, The Conference Board LEI for Japan now stands at 102.7 (2010=100). Based on revised data, this index was unchanged in April and decreased 0.4 percent in March. During the six-month span through May, the index decreased 0.9 percent, and six of the ten components advanced (diffusion index, six-month span equals 60.0 percent).

COINCIDENT INDICATORS. Only one of the four components that make up The Conference Board CEI for Japan increased in May. The positive contributor to the index was the number of employed persons. Industrial production, wage and salary income, and the retail, wholesale, and manufacturing sales* component declined in May.

With the decrease of 0.2 percent in May, The Conference Board CEI for Japan now stands at 97.7 (2010=100). Based on revised data, this index decreased 0.1 percent in April and decreased 0.2 percent in March. During the six-month span through May, the index decreased 0.1 percent, and only one of the four components advanced (diffusion index, six-month span equals 37.5 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” 9:00 P.M. ET July 9, 2015. 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:

Indicator Program: indicators@conference-board.org

Media Contacts:

Carol Courter:
1 212 339 0232
carol.courter@conference-board.org

Jonathan Liu:
1 212 339 0257
Jonathan.liu@conference-board.org

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