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Economy in Brief

Japan Economy Shows Weakening Sectors and a Weakening Outlook
by Robert Brusca March 6, 2008

The Teikoku indices show a weakening Japan economy. Just today Japan policymakers, commenting on the state of the economy, were saying that it is weak and did not know if the word ‘recession’ should be used in connection with it. The Teikoku index hit a five year low in January and has recovered slightly in February. The NTC MFG index is also weak but not quite as weak as the Teikoku MFG reading; it is not in the bottom 5 percent of its range but in the bottom 30% of it.

The Teikoku outlook indices show that progressively greater weakness is expected looking ahead. While each of these indexes, the current, the 6-mo ahead and 12-mo ahead index, has fallen, each has also made a small rebound in February. Up until now, Japan has taken a mostly upbeat view of the economy. It took Japanese officials a long time to downgrade the economy and its prospects. But the slide in the economy is now undeniable. Still, like the US, we do not yet know how far the economy will skid.

Key Japanese Surveys
  Raw readings of each survey Percent of 5Yr range*
  Feb-08 Jan-08 Dec-07 Nov-07 Feb-08 Jan-08 Dec-07
NTC MFG 50.8 52.4 52.3 50.8 30.5% 47.4% 47.3%
Econ Trends (Teikoku'/50 neutral/weighted diffusion)
MFG 38.5 37.9 40.8 41.7 4.4% 0.0% 0.0%
Retail 32.6 31.3 34.2 34.4 9.4% 0.0% 0.0%
Wholesale 35.3 34.5 37.0 38.3 6.3% 0.0% 0.0%
Services 41.0 40.4 43.5 45.0 5.4% 0.0% 20.1%
Construction 29.7 28.9 32.0 32.6 7.5% 0.0% 16.4%
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