The economy must have entered a contraction phase after being dragged down by sluggish manufacturing and exports amid a slowdown in global economic growth, a government report released Tuesday showed.
In a preliminary report on the country’s key composite index for September, the Cabinet Office revised downward the basic assessment of the coincident index from “weakening” to “signaling a possible turning point.” The change tentatively shows the economy is highly likely to be moving toward a contraction, the office said.
The September index of coincident indicators such as production, retail sales and the ratio of new job offers to seekers fell 2.3 points from August to 91.2 against the 2005 base of 100, marking the longest losing streak since the 10 months of deterioration from June 2008 to March 2009 amid the global financial crisis.
The office said the government’s evaluation of the economic state will be shown in its monthly economic report.
It is the first time in 16 months that the basic assessment was revised to “signaling a possible turning point” toward contraction after the Great East Japan Earthquake and tsunami last year dealt a heavy blow to the world’s third-largest economy.
The office indicated if the October coincident indicators are negative, the basic assessment could be further revised downward to “worsening.”
“Production and exports are not performing well, and the weakness among manufacturers, especially transport machines, took a toll,” the official said.
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