• SHARE

A key gauge of the current state of Japan’s economy plunged below the boom-or-bust line of 50 percent in August for the first decline in 16 months, the government said Thursday.

The development fueled concerns that the recovery of the world’s second-largest economy might have peaked.

The index of coincident economic indicators stood at 38.9 percent, down from a revised 80 percent in July, the Cabinet Office said in a preliminary report. The August reading snapped a streak of 15 straight months for the index to stay at 50 percent or above this threshold.

A reading above 50 percent is considered a sign of economic expansion. A figure below this line is seen as a sign of contraction.

An official at the Cabinet Office said the index is likely to stay below the 50 percent line after revisions due Oct. 15.

Looking ahead, the index of coincident indicators is expected to approach the threshold in September.

Despite the pessimistic outlook, the official said the government left unchanged its assessment that the economy is recovering, saying the deterioration in August was due primarily to one-off factors such as typhoons that forced transport vessels to suspend voyages and kept consumers from going out shopping.

“The index for coincident indicators sometimes slips below the 50 percent line even at a phase of economic upswing. We should not change our economic assessment based on the result of a single month,” he said.

Of the 11 indicators used to calculate the coincident index, nine indicators were available, with five of them showing negative readings, the report says.

The five are large-lot electricity consumption, sales among department stores, sales among small and midsize companies, industrial production and industrial shipments.

The index of leading indicators, predicting economic developments about six months ahead, came to 72.2 percent in August, up from a revised 60.0 in July, rising for the 12th month in a row.

The index of lagging indicators, designed to measure economic performance in the recent past, was at 16.7 percent. It retreated from a revised 41.7 in July, but stayed below the 50 percent line for the second straight month, the report says.

The diffusion indexes compare the levels of various economic data for a reporting month with 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.

SUBSCRIBE NOW