Japan’s broadest indicator of economic health rose at the fastest pace in 29 years, signaling the nation’s deepest postwar recession is easing.
The leading index, a composite of 12 indicators including stock prices and consumer confidence, climbed to 79.8 in June from 76.9 in May, the Cabinet Office said yesterday in Tokyo. It was the largest advance since comparable data were made available in January 1980. The median estimate of 15 economists surveyed by Bloomberg News was for 79.7.
“The report suggests Japan’s economy may have entered an expansionary phase and the recovery may be sustainable,” said Susumu Kato, chief economist at Calyon Securities in Tokyo. “Even as weak employment conditions continue to weigh on the household sector, production and exports are recovering, helping corporate profits.”
PHOTO: AP
Japan’s economy grew at an annual 3.8 percent pace last quarter from a record 14.2 percent contraction in the first three months, according to a Bloomberg News survey of economists. Industrial production surged 8.3 percent last quarter, the biggest jump since 1953, a report showed last week. Exports gained in June from a month earlier.
“Companies have brought forward inventory adjustments and exports are increasing,” said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo. “That signals Japan’s economy is on a recovery track.”
Investor optimism that the worst is over for Japan has also spurred a 47 percent gain in the Nikkei 225 Stock Average since March 10, when it reached a 26-year low.
The rebound in global demand hasn’t spread to households, whose outlays account for more than half of the economy. The unemployment rate rose to a six-year high of 5.4 percent in June, and economists expect it to reach a postwar record next year. Wages fell at an unprecedented pace that month as companies slashed bonuses.
Coincident index, a measure of the current state of the economy, rose for a third month to 87.8. The three-month moving-average of the index, which the government uses to make its monthly evaluation, rose to 87 in June, the second monthly increase, the report showed.
The Cabinet Office left its assessment of the coincident index unchanged after raising it for May, saying the gauge is showing signs of bottoming.
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