TOKYO (MNI) – Japan’s coincident composite index (CI), which
reflects current business conditions, is expected to post a sixth straight drop
in September, indicating that the economy may be already in a downward cycle,
economists said.
The Cabinet Office will release the Indexes of Business Conditions at 1400
JST on Tuesday, Nov. 6 (0500 GMT).
The September coincident CI will fall about 2.5 points to 91.0, a
sixth consecutive monthly drop after -0.3 point in August, according to
economists polled by MNI.
In light of the continued weakness, the government is expected to revise
down its assessment based on the coincident CI, saying the index shows the
economy is at a “possible turning point” toward a slump,
It said last month that the index shows the economy was “marking
time.”
Yoshiki Shinke, senior economist at Dai-Ichi Life Research
Institute, said, “It is highly possible that the Japanese economy has
already entered a downturn after peaking in March.”
Until earlier this year the economy had been recovering gradually since
April 2009 after the last downward phase from March 2008 to March 2009.
Shinke forecast that the October coincident CI, which is due out on Dec. 7,
will market a further drop and thus that the government will revise down its
assessment, saying the index shows the economy is “worsening” because the index
is greatly influenced by industrial production, which has shown sharp drops.
It would be the first time since May 2009 that the government will have
used the term “worsening” to describe the current economic climate.
October industrial output is expected to decline 1.5% on the month, posting
a fourth straight monthly fall, after -4.1% in September, according to a survey
of firms conducted by the
Ministry of Economy, Trade and Industry.
Japanese exports and production have been hit by the global slump,
prompting the Bank of Japan to increase financial asset buying and the
government to prepare more fiscal programs.
The BOJ’s real export index stood at 111.5 (100 for the
2010 base year) in September, down 10.3% from the recent peak marked
in April.
However, economists believe that the current downturn will be relatively
short-lived.
Tatsushi Shikano, senior economist at Mitsubishi UFJ Morgan Stanley
Securities Business Cycle Research, said the economy will hit bottom in the
October-December quarter and will start picking up in early 2013, thanks to an
expected improvement in global demand and domestic automobile production.
Chinese consumer sentiment improved in October for the first time in four
months on the back of data suggesting that the economy is finally stabilizing
and on hopes of further good news after the Communist Party selects a new
generation of leaders at this week’s meeting, according to the results of the
MNI China Consumer Sentiment Indicator.
The headline indicator rose to 92.3 in October from September’s
year-to-date low of 89.3. October’s reading was also the highest since June’s
101.6.
In Japan, output of transportation vehicle including automobiles is
expected to rise 1.7% m/m in October and 0.3% in November, after showing
declines for five months in a row through September, according to the METI.
–email: skodama@mni-news.com
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