The Conference Board(R) Japan Business Cycle Indicators(SM)

• The Conference Board LEI for Japan increased in May for the first time since June 2007, and the strengths among its components were also more widespread than the weaknesses this month. Substantial gains in the six-month growth rate of productivity, the index of overtime worked, stock prices, and money supply more than offset the large declines in operating profits and the Tankan business conditions index. With May's increase, the six-month change in the leading economic index stands at -21.8 percent (about a -38.9 percent annual rate),which is slightly less negative than it has been in recent months. The weaknesses among the leading indicators have also grown less widespread during this period.
  

• The Conference Board CEI for Japan declined slightly in May, following its first gain in a year in April. Large declines in the number of employees and the retail, wholesale, and manufacturing sales component offset the record monthly increase in industrial production this month. The six-month decline in the index has moderated in recent months -- to 7.1 percent (a -13.6 percent annual rate) for the period ending in May, but the weaknesses among its components have remained widespread. At the same time, real GDP contracted at a 14.2 percent annual rate in the first quarter of 2009, the largest drop in 35 years, following a 13.5 percent contraction in the fourth quarter of 2008.
  

• The rates of decline in The Conference Board LEI and The Conference Board CEI for Japan, which became very sharp beginning in the third quarter of 2008, seem to have moderated somewhat in recent months. However, given the still deep and widespread declines in both indexes, it is too early to tell whether Japan's economy is starting to recover. Taken together, the recent behavior of the composite indexes suggests that the current contraction in economic activity is likely to continue, but will probably become less severe in the near term.
  

Summary Table of Composite Economic Indexes

  2008 2009 6-month
   MarApr   MayNov to May

Leading Economic index (LEI)  68.6 p 66.5 p67.0 p
Percent Change-3.7 p -3.1 p 0.8 p   -21.8 p
Diffusion 50.0   60.0  70.0  40.0

Coincident Economic Index (CEI)   91.8 p 92.2 p92.0 p
Percent Change-1.6 p  0.4 p-0.2 p-7.1 p
Diffusion 25.0   25.0  50.0  25.0

n.a. Not availablep Preliminaryr Revised

Indexes equal 100 in 2004

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