The key gauge of the nation’s economic health stayed below the boom-or-bust line of 50 percent in June for the sixth-straight month, providing more evidence of economic contraction, the government said Monday.

The index of coincident indicators came to 31.3 percent in the latest reporting month, with all production-related component indicators showing negative moves, the Cabinet Office said in a preliminary report.

Six months is the longest the index has remained below 50 percent since a 17-month stretch between August 1997 and December 1998, when the economy was in recession.

Government economists say a reading of below 50 percent is considered a sign of economic contraction while a figure above 50 is viewed as a sign of expansion.

“Given the recent movement of the coincident index, there is a possibility the economic phase has changed,” Cabinet Office economist Yoshihiko Senoo said, adding that the possibility was higher than in the preceding month.

According to Senoo, the index is likely to remain below 50 percent in July.

Meanwhile, the index of leading economic indicators, a measure of economic growth six to nine months ahead, came to 37.5 percent, following a revised 70 percent in May.

That was the first figure above 50 percent in five months, but is now regarded as an erratic move, Senoo said.

The lagging index, which gauges performance in the recent past, was 33.3 percent, below 50 percent for the fourth-straight month.

Of the eight component indicators available for the coincident index, industrial output stayed in the minus column for the sixth-successive month and overtime hours for the seventh–straight month.

Department store sales and wholesaler sales were positive, but their firmness may not last, Senoo said.

He also pointed out new job offers — up for the second-straight month but also expected to turn down in the offing — among the leading indicators.

Of the lagging indicators, full-time workers at manufacturing firms continued to decrease for the 43rd–straight month while the jobless rate sank for the second month in a row.

The diffusion indexes of the coincident, leading and lagging indicators compare the current levels of various economic indicators with their levels three months earlier.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.