The key gauge of the state of the economy remained below the boom-or-bust line of 50 percent in February for the 14th straight month, but the index of leading indicators topped the threshold for the second consecutive month, the government said Friday.
The coincident index stood at 33.3 percent in February, up from a revised 10 percent in the previous month, the Cabinet Office said in a preliminary report.
But the leading index, a projection of economic activity six months in the future, was 66.7 percent, compared with a revised 60 percent.
A coincident index reading below 50 percent is considered a sign of economic contraction while a figure above that is viewed as a sign of expansion.
“Given that the leading index topped 50 percent for the second month . . . the coincident index exceeding 50 percent deserves close attention,” said Yoshihiko Senoo, director of the Business Statistics Department at the Cabinet Office’s Economic and Social Research Institute.
The lagging index, which gauges performance in the recent past, came to an unchanged 16.7 percent, below 50 percent for the seventh successive month.
The government expects the coincident index to remain below 50 percent in March, while the leading index could stay above the line, the senior government economist said.
“The coincident index is in a severe trend, but production-related indicators show signs that they have stopped falling,” Senoo said, adding that production-related factors usually spur an economic recovery.
“The economy may have already hit bottom, but currently there are no data providing evidence of this,” he said.
Of indicators composing the coincident index, those on industrial production and industrial shipments both swung back into positive territory for the first time in 14 months, thanks to brisk exports of electronics parts and automobiles.
Overtime work hours edged up for the first positive reading in 15 months, but sales at department stores fell into negative territory for the first time in two months.
Of leading indicators, inventories of consumer goods showed positive readings for the third straight month, while stocks of industrial production goods looked strong for a second consecutive month.
The commodity market gauge also gained for the third month, mainly due to steel products whose output cuts helped reduce inventories and strong demand for crude rubber used in making cars.
The diffusion indexes — the coincident, leading and lagging — compare the current levels of various economic indicators with their levels three months earlier.
Households buy less
Average household spending in February fell 3.8 percent in real terms from a year earlier to 274,978 yen after posting a year-on-year increase of 0.8 percent in January, the government said Friday.
The figure also represents a seasonally adjusted decline of 3.6 percent from January, the Public Management, Home Affairs, Posts and Telecommunications Ministry said in a preliminary report.
“Household spending is still following an up-and-down pattern,” a ministry official said.
The fall in the key gauge of personal consumption reflects reduced spending in areas such as education, automobiles, clothing and household items, according to the ministry.
Spending on education, such as tuition for regular and cram schools, as well as study materials, fell 15.6 percent in real terms from a year earlier to 12,731 yen.
Outlays for transport and telecommunications, including such things as purchases of automobiles and auto parts, dipped 11.6 percent to 32,376 yen.
Expenditures on furniture and household items fell 8.4 percent to 8,256 yen, while those on clothing such as undergarments and traditional Japanese items fell 7.1 percent to 11,280 yen.
Health-care spending rose 4.1 percent to 11,228 yen, resulting from an influenza epidemic.
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