The Conference Board CEI for Japan also declined sharply in March. Although industrial production rose sharply in March, its first increase in six months, the number of employees; the retail, wholesale, and manufacturing sales component; and wage and salary income all declined substantially. The six-month growth rate of the index fell to -7.6 percent (a -14.6 percent annual rate), the lowest since the index began in 1965. In addition, the weaknesses among the coincident indicators continued to be very widespread over the past six months. At the same time, real GDP contracted at a 12.1 percent annual rate in the fourth quarter of 2008, the largest drop in 35 years. The growth rate of real GDP averaged -4.2 percent (annual rate) in 2008.
The widespread declines in The Conference Board LEI and The Conference Board CEI for Japan have been persistent for more than a year now. Although the rate of decline in both composite indexes seems to have stabilized in recent months and industrial production improved in March, it is too early to tell whether Japan's economy is starting to recover. The recent behavior in the leading economic index and coincident economic index for Japan suggests that the current contraction in economic activity is likely to continue in the near term.
LEADING INDICATORS
Four 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 interest rate spread, stock prices, the (inverted) business failures, and real money supply. The negative contributors - in order from the largest negative contributor to the smallest - include real operating profits, the six-month growth rate of labor productivity, the Tankan business conditions survey, dwelling units started, the new orders for machinery and construction component, and the index of overtime worked.
With the decrease of 3.5 percent in March, The Conference Board LEI for Japan now stands at 68.8 (2004=100). Based on revised data, this index decreased 5.7 percent in February and decreased 6.3 percent in January. During the six-month span through March, the index decreased 26.4 percent, and one of the ten components advanced (diffusion index, six-month span equals 25.0 percent).
COINCIDENT INDICATORS
One of the four components that make up The Conference Board CEI for Japan increased in March. The positive contributor to the index was industrial production. The retail, wholesale, and manufacturing sales component, number of employed persons, and wage and salary income declined in March.
With the decrease of 1.1 percent in March, The Conference Board CEI for Japan now stands at 93.6 (2004=100). Based on revised data, this index decreased 1.8 percent in February and decreased 1.3 percent in January. During the six-month span through March, the index decreased 7.6 percent, and one of the four components advanced (diffusion index, six-month span equals 12.5 percent).
