Global Leading Indicators

The Conference Board Leading Economic Index^®(LEI) for Japan increased by 0.3 percent in June 2022 to 92.4 (2016=100), following a 0.2 percent decrease in May. The LEI declined by 1.8 percent in the first half of 2022, after contracting by 4.3 percent in the second half of 2021.

The Conference Board Coincident Economic Index^® (CEI) for Japan rebounded by 1.0 percent in June 2022 to 99.9 (2016=100), following a 0.9 percent decline in May. The CEI contracted by 0.1 percent in the six-month period from December 2021 to June 2022, following a 0.5 percent decline between June and December 2021.

“After four consecutive declines, the Japan LEI improved slightly in June, but still points to slower growth in the second half of 2022,” said Ataman Ozyildirim, Senior Director, Economic Research, at The Conference Board. “The June gain was widespread and primarily driven by an improving outlook in manufacturing in Japan, which more than offset declining stock prices, rising business failures, and worsening labor productivity. However, high inflation, uncertainty in energy markets, and global trade disruptions continue to pose headwinds for the global economy. Thus, The Conference Board downgraded year-over-year real GDP growth for Japan in 2022 to 1.6 from 1.9 percent.”

Japan LEI improved slightly in June, but short-term challenges to growth persist

Improving New Orders and rising Overtime Worked in Manufacturing fueled the gain in the Japan LEI

Despite the slight improvement, the Japan LEI still points to slow growth

About The Conference Board Leading Economic Index^® (LEI) for Japan: The composite economic indexes are the key elements in an analytic system designed to signal peaks and troughs in the business cycle. The indexes are constructed to summarize and reveal common turning points in the economy in a clearer and more convincing manner than any individual component. The CEI is highly correlated with real GDP. The LEI is a predictive variable that anticipates (or “leads”) turning points in the business cycle by around 4 months. Shaded areas denote recession periods or economic contractions. The dates above the shaded areas show the chronology of peaks and troughs in the business cycle.

The ten components of The Conference Board Leading Economic Index® for Japan include: Operating Profits, Dwelling Units Started, Business Failures, Index of Overtime Worked, Stock Prices (TOPIX), Six Month Growth Rate of Labor Productivity, Tankan Business Conditions Survey, Money Supply, Yield Spread, and New Orders for Machinery and Construction.

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