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The government said Friday its key gauge of the current state of the economy stayed above the boom-or-bust line in May for the fourth straight month.

The index of coincident indicators rose to 100 percent from 80 percent in April. It is the first time since November 1996 that the index has hit 100 percent, the Cabinet Office said in a preliminary report.

An index reading of above 50 percent is considered a sign of economic expansion and a figure below that is viewed as a sign of contraction.

An upswing in the indicators on shipments of investment goods and department store sales caused all nine coincident readings given so far, comprising mostly production data, to be positive compared with three months earlier, it said.

“The coincident index is improving and it is possible the economic phase has changed,” said Yoshihiko Senoo, director at the Cabinet Office’s Economic and Social Research Institute.

As for the index’s April move, Senoo said “it is possible that the severe (economic) conditions are changing.”

But Senoo refrained from stating clearly whether the economy has begun to expand. The government has said the economy has bottomed out, but the assessment in this report is two-phased and requires gathering data over a longer period of time, he said.

According to the report, the last time there was a trend change was in October 2000, when the economy began contracting.

The coincident index is likely to remain above 50 percent in June, as industrial production is expected to remain flat from May to June, the official added.

The output indicator was positive for the fourth consecutive month thanks to brisk exports, boosting other production figures as well.

But the indicators that turned up in the reporting month could fall again in June due to weak consumption, Senoo said.

The index of leading indicators, which measures economic moves about six months ahead, rose to 88.9 percent from 75 percent, staying above 50 percent for the fifth straight month.

The lagging index, which gauges performance in the recent past, fell to 33.3 percent from 66.7 percent.

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

Households spend less

Japan’s average household spending in May fell a real 1.6 percent from a year earlier to 292,183 yen, down for the first time in two months, the government said Friday.

The fall in the key gauge of personal consumption follows a year-on-year increase of 1.9 percent in April and a decrease of 1 percent in March, according to a preliminary report from the home affairs ministry.

The 1.6 percent figure represents a seasonally adjusted drop of 3.3 percent from April. It reflects less spending in areas such as housing, utilities, clothing, health-care and education, the ministry said.

The year-on-year decline is bigger than the 0.4 percent fall in spending by households of wage earners for May that was reported earlier.

Household spending accounts for about 60 percent of Japan’s gross domestic product and wage-earning households’ outlays make up 60 percent of total household spending.

Expenditures on housing dropped 8.1 percent from a year earlier to 20,311 yen per household, mainly because of a decrease in spending for maintenance and repair.

Spending on education — which includes costs for tuition, textbooks and other educational materials — dropped 5.4 percent to 11,375 yen per household.

Outlays for health-care and medical services fell 4.8 percent to 11,175 yen per household. Those for utilities dropped 3.1 percent to 19,476 yen per household and those for clothing and footwear 2.8 percent to 14,052 yen per household.

But outlays on furniture and other household items rose 5.2 percent to 9,814 yen per household in the reporting month on increased spending for items such as beds and durable household goods.

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