Japan’s key gauge of the state of the economy stayed above the boom-or-bust line of 50 percent in July for the sixth consecutive month, the government said Friday in a preliminary report.
The coincident index stood at 88.9 percent, up from a revised 81.8 percent in June, the Cabinet Office said.
A senior Cabinet Office official said the index’s improving trend remains intact and the index for August will probably remain above 50 percent.
A reading of above 50 percent is considered a sign of economic expansion, while a figure below that is seen as a sign of contraction.
“The coincident index is improving,” the official said, underlining that this maintains the government’s view from June. “As for August, the index may stay above 50 percent, although we are watching whether the level will fall from July.
“However, it should be noted that the brisk production-related indicators owe largely to foreign demand, so moves in overseas economies and domestic demand will have to be closely monitored.”
Eight of the nine components available so far remained in positive territory in July compared with three months earlier, with only department store sales in negative territory.
The official said the July coincident index of 88.9 percent may not reflect the actual state of economic activities because the indicators of manufacturers’ overtime and investment goods shipments, which were in plus territory, were worse than the data showed and could be considered to be in negative territory.
The index of leading economic indicators, measuring economic moves about six months in advance, stood at 66.7 percent, holding above 50 percent for the seventh straight month, but down from a revised 75 percent in June.
The lagging index, gauging recent performance, was 50 percent, falling from a revised 57.1 percent in June.
The diffusion indexes of the coincident, leading and lagging indicators compare the current levels of various economic indicators with their levels three months earlier.
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