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Economy in Brief

Japan's 'Economy Watchers' Don't Like What They See Does Anyone?
by Robert Brusca   November 09, 2010

Japan's Economy Watcher's index fell in October as the bottom fell out of the current conditions index. That index is now in the bottom 60th percentile (top42 percentile) of its High/Low range. By queue some 70% of the values for the current index lie above the current value pushing it to the bottom 30th percent of its range by queue. The Future index is near the bottom 25 percentile of its historic queue even though it stands at a more lofty position in its high/low range where it is in the top 40%. And, as the chart shows, the trends in the current index are not good. At least the judgment of future conditions edged only slightly lower and still lies above its reading of two months ago. The employment index is near the midpoint of its queue range and in the 70th percentile of tis high/low range. Jobs are a relative bright spot.

Economy watchers pessimism does not stand alone - The Teikoku sector indices are a lot more uniform in their (weak) assessment of current conditions as they place all the sectors between the 31st to 36th percentiles in their queue ranking. These also are low rankings but not quite as bad as the Economy Watchers' 30% and 25% nor as good as the near 50% for jobs in the Economy Watchers framework when set on a queue framework. As with the Economy Watchers the Teikoku High/Low percentile readings are generally higher than the queue percentile standings. The Economy Watchers' queue percentile are usually some 30 percentile points lower than the high/low readings. For Teikoku the queue readings are some 15% lower than the high/low assessments except for Construction and Services where both approaches place about the same standing on the sectors.

Any way you slice it these are weak readings - The percentile of range figures shown in the table above position the various survey readings not in an ordered queue of historic values but set them as a percentile between their historic highs sand lows. The message here is that the current levels of the Teikoku and Economy Watchers indices confirm that the current standing of these measures leaves them well up into their range and not close to the bottom which can be at a depressed level in recession. However, when ranked in an ordered queue of values and compared with what is normal over time the economic performance is in the bottom third of what the economy has been accustomed to or worse. Moreover, these measures largely are losing momentum. So the picture is one of 'bad' going on to 'worse'.

Key Japanese Surveys
  Raw Readings of Each Survey Percentile of 5Yr Range*
  Oct-10 Sept-10 Aug-10 Jul-10 Oct-10 Sept-10 Aug-10
Diffusion
Economy Watchers 40.2 41.2 45.1 49.8 58.7% 61.1% 70.5%
  Employment 49.1 51.4 51.3 55.5 71.2% 75.3% 75.1%
  Future 41.1 41.4 40.0 46.6 60.3% 61.0% 57.4%
NTC MFG 47.2 49.5 50.1 52.8 64.1% 72.3% 74.7%
Econ Trends (Teikoku'/50 Neutral/Weighted Diffusion)
  MFG 33.4 35.4 35.9 36.7 53.2% 59.3% 60.7%
  Retail 29.6 31.8 33.2 33.7 44.2% 53.3% 59.6%
  Wholesale 31.9 32.8 33.5 33.7 48.6% 52.0% 54.3%
  Services 32.4 33.1 33.6 33.7 35.5% 37.5% 38.2%
  Construction 25.2 26.0 25.6 26.1 32.2% 35.8% 33.7%
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