A key gauge measuring the state of the economy stood at 14.3 percent in April, remaining below the boom-or-bust line of 50 percent for the third straight month, the Cabinet Office said Tuesday in a preliminary report.
A reading below 50 percent on the index of coincident indicators is considered a sign of economic contraction while a figure above that is viewed as a sign of expansion. It is generally believed the economy has entered into a downward phase if the index, designed to measure the current economic state, remains below 50 percent for three months in a row.
The index stood at 11.1 percent in March and 10 percent in February.
An official at the Cabinet Office attributed the dismal showing mainly to the decline in industrial production and weak employment. Given these factors, he said he anticipated that the index may again stay below the 50 percent threshold in May.
“Given the falling trend in production, further attention is needed to monitor moves in the coincident index,” he said, leaving the government’s assessment of the data unchanged from a month earlier.
He also said it is necessary to keep a close eye on the economic condition of other countries, particularly the United States, and on capital investment moves.
He refused to comment on whether the April data show the economy falling into recession. It is the longest bust period for the index since August 1997 to December 1998.
Meanwhile, the Cabinet Office said the index of leading economic indicators, a measure of economic growth six to nine months ahead, stood at 28.6 percent compared with 20 percent in March, remaining below the 50 percent threshold for the fourth month in a row.
The lagging index, which gauges performance in the recent past, was 33.3 percent in the reporting month after March’s 35.7 percent, remaining below 50 percent for the second straight month.
The diffusion indexes of the coincident, leading and lagging indicators compare the current levels of various economic indicators with their levels three months earlier.
Among the seven already available coincident index components for April, only department store sales were in positive territory.
Five of the seven, such as the final demand-to-inventory ratio and new car registrations, showed negative readings, while the household spending index in the lagging indicator turned negative for the first time in eight months.
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