Description
The Japan Leading Composite Index is published by the Cabinet Office of Japan and serves as a comprehensive indicator used to forecast future economic activity. These indicators typically signal changes in economic activity before they occur, making the index widely used as an economic forecasting tool. The index is composed of 11 key economic indicators, including:
1. Index of Producer's Inventory Ratio of Finished Goods - Final Demand Goods
2. Index of Producer's Inventory Ratio of Finished Goods - Producer Goods for Mining and Manufacturing
3. New Job Offers - Excluding New School Graduates
4. Machinery Orders at Constant Prices - Manufacturing
5. Total Floor Area of New Housing Construction Started
6. Consumer Confidence Index
7. Nikkei Commodity Price Index - 42 Items
8. Money Stock (M2) - Change from Previous Year
9. Stock Prices - TOPIX
10.Index of Investment Climate - Manufacturing
11. Sales Forecast D.I. of Small Business
When the Leading Index rises, it generally indicates an increase in future economic activity, suggesting that the economy may enter an expansion phase. Conversely, a decline in the index may indicate that future economic activity will slow down, signaling a potential recession.
This data is released monthly and provides an update on the changes in Japan's leading economic indicators from the previous month.
Note: The Composite Index differs from the Diffusion Index in that the Composite Index is based on the weighted average or geometric mean of multiple economic indicators, directly reflecting the magnitude of overall economic activity changes. It provides a single value that indicates the strength of the economic trend, making it suitable for assessing the speed and direction of economic growth.