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Economy in Brief

Japan Indices Show the Profile of Impact and Rebound
by Robert Brusca  August 19, 2011

Japan’s indices are showing a rebound in its three main sectors: Manufacturing, Services (tertiary sector) and Construction. The rebound is being led by a strong recovery after a deep drop in manufacturing and mining. Services industries also incurred what was a large drop for those trend-driven businesses and have been steadily climbing higher. The construction sector that is supposed to lead Japan higher as the rebuilding gets into full swing has taken a big hit from the disasters and has been the slowest sector to recover.

In the far right-hand columns, the table above shows the ranking of the various sector indices in their range of values since 1993. The services (tertiary) sector is at the relative best standing in the 60th percentile of its range but also at a stronger 75th percentile standing in its queue. The queue standing tells us that the standing is lower than this only 25% of the time. Construction is near the bottom of its queue and its range. Mining and manufacturing is a sector that is at the midpoint of its range but stands much lower in its queue or ranking. The mining and MFG sector has been weaker than its current index level only 23% of the time. It stands in the bottom quartile of its historic range and that is not good.

What we see is evidence of a rebound in Japan and one that is not yet being led by Japan’s rebuilding efforts. There are a lot of services that are being taken up and undoubtedly some of these are related to the provision of disaster relief. Japan’s manufacturing community has been working overtime to try to restore lost output capabilities. There is a strong recovery in progress there.

But much of Japan’s MFG product gets exported. Japan is a country with not just capped population growth but a shrinking population. For expansion Japan has been leaning on its exports. But with world growth tapering off or worse-falling off and possibly into recession, Japan’s growth may yet shift gears and come to rely on its construction sector which continues to lag the other sectors and to lag them badly.

Up to Date Japan Industry Survey
  Recent Months Moving Averages Extremes; Range Rank
3Mo 6Mo 12Mo Max Min %ile %ile
All Industry 96.2 94.0 92.3 94.2 94.4 95.5 103.4 90.0 46.3% 49.5%
Construction 72.9 72.7 70.1 71.9 74.6 75.4 138.6 70.1 4.1% 1.4%
Mining and MFG 92.6 89.2 84.0 88.6 90.4 92.3 110.1 71.4 54.8% 23.1%
Tertiary 98.5 96.7 95.9 97.0 97.1 97.7 103.5 90.8 60.6% 75.0%
Ranges, Max, Min and ranking standings since 1993
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