Global| Oct 08 2010Japan's Economy Watchers Index Sends Mixed Signals
Summary
Japan's recovery from its recession seems to progress from end 2008 according to the Economy Watcher's index. Since then index appears to have made a 'bunny-hop' recovery with its current phase being the down portion of the second [...]
Japan's recovery from its recession seems to progress from end 2008 according to the Economy Watcher's index.
Since then index appears to have made a 'bunny-hop' recovery with its current phase being the down portion of the
second mini up-cycle.
While the future index is ticking up and the employment index is essentially steady, the current index is sharply lower. That ordering creates somewhat of a conundrum. The weakness in the current index is severe. Ordered by month to month changes, the current month's change ranks 120th out of 128 months of observations. That ranking places it in the bottom six percentile of all ranked monthly changes ranked month-to-month over the past decade.
Still, the other components are nowhere near that weak. Having the future index rising is good news not just because of its name but because it actually does seems to have some true leading properties.
The Teikoku indices echo the message of weakens in the Economy Watchers index which is geared to look at the service sector. But the Teikoku index is not as weak in assessing the service sector nor do other branches of the economy appear as weak as in the Economy watcher's current framework. That's another reason to take solace from the economy watcher's future index.
Still none of these indices sees a real improving trend.
Japan clearly is troubled and the strength of the yen is making its job of recovery even harder to accomplish. Japan remains on the ropes.
| Key Japanese Surveys | |||||||
|---|---|---|---|---|---|---|---|
| Raw Readings of Each Survey | Percentile of 5Yr Range* | ||||||
| Sep-10 | Aug-10 | Jul-10 | Jun-10 | Sep-10 | Aug-10 | Jul-10 | |
| Diffusion | |||||||
| Economy Watchers | 41.2 | 45.1 | 49.8 | 47.5 | 61.1% | 70.5% | 81.9% |
| Employment | 51.4 | 51.3 | 55.5 | 56.3 | 75.3% | 75.1% | 82.5% |
| Future | 41.4 | 40.0 | 46.6 | 48.3 | 61.0% | 57.4% | 74.4% |
| NTC MFG | 49.5 | 50.1 | 52.8 | 54.0 | 72.3% | 74.7% | 84.6% |
| Econ Trends (Teikoku'/50 neutral/weighted diffusion) | |||||||
| MFG | 35.4 | 35.9 | 36.7 | 35.3 | 59.3% | 60.7% | 63.2% |
| Retail | 31.8 | 33.2 | 33.7 | 31.8 | 53.3% | 59.6% | 62.0% |
| Wholesale | 32.8 | 33.5 | 33.7 | 32.7 | 52.0% | 54.3% | 55.1% |
| Services | 33.1 | 33.6 | 33.7 | 32.9 | 37.5% | 38.2% | 38.4% |
| Construction | 26.0 | 25.6 | 26.1 | 24.6 | 35.8% | 33.7% | 36.4% |
Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.
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