Japan, still shrinking

["Ian Murray" <seamus2001@xxxxxxxx>]

[Japan Times]
NINE MONTHS OF CONTRACTION
Key economy gauge reads bust

The government said Monday its key gauge of the state of the economy
remained below the boom-or-bust line of 50 percent in September for
the ninth consecutive month.

The coincident index, designed to measure the current state of the
economy, stood at 12.5 percent in the reporting month after marking
zero in August, the Cabinet Office said in a preliminary report.

"Coincident indexes in recent months suggested the Japanese economy
has been in a 'severe' situation. The possibility is high that the
coincident index for October will stay below 50 percent," Cabinet
Office economist Yoshihiko Senoo said.

A reading under 50 percent is considered a sign of economic
contraction and a figure above that is viewed as a sign of expansion,
according to Cabinet Office economists.

Business performance declined for seven of the eight components
surveyed in the coincident indicator. Of the eight, only sales at
department stores were up, the first gain since June.

But Senoo said that does not necessarily mean that the department
store business is recovering, but instead only indicates that shoppers
who had gone to stores that had recently closed went to other ones.

The slumping seven components include power demand by large-lot users,
as well as production, consumption and employment-related components.

Production marked a decline for the ninth straight month. Reductions
in automobile and personal computer output in particular caused
September's decline, Senoo said.

The index of leading economic indicators, a forecast of growth in the
economy six to nine months ahead, came to 37.5 percent, compared with
a revised 50 percent in August. The figure for September marked the
first dip below 50 percent since June.

Of the eight components covered in the leading indicator, performance
improved in new residential construction projects, new nonresidential
construction projects and money supply.

The lagging index, which gauges performance in the recent past, was 20
percent, compared with 14.3 percent in August. The September lagging
index slipped below 50 percent for the second consecutive month.

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

The Japan Times: Nov. 6, 2001