— Japan Mar Leading CI Revised +4.2 Pt M/M, Up 13 Months In Row
— Cabinet Office Repeats CI Shows Japan Economy Improving

TOKYO (MNI) – Japan’s coincident composite index (CI), which
reflects current business conditions, rose a revised 1.5 points to 101.5
in March, its 12th straight monthly rise, after rising 0.2 points in
February, the Cabinet Office said on Friday.

The March increase was revised up from the 1.1-point gain
originally reported.

In reporting preliminary March data on May 12, the Cabinet Office
repeated its assessment based on the coincident CI, saying the index
“shows Japan’s economy is improving.”

That statement has been unchanged since the Cabinet Office revised
up its view for the second consecutive month in a row in October last
year.

Other details from the data follow:

The leading composite index, which measures the state of the
economy three months ahead: Mar revised down to 102.7 (revised +4.2
points m/m) from a preliminary 102.8 vs. Feb 98.5 (revised +1.3 points),
up for the 13th straight month after posting the first gain in six
months in March 2009.

The lagging CI, which reflects economic conditions three months
ago: Mar revised down to 85.3 (revised +0.9 points m/m) from a
preliminary 85.4 vs. Feb revised 84.4 (revised +0.4 points).

The diffusion index (DI) of coincident indicators: Mar unrevised
100.0 vs. Feb 100.0. It has recovered significantly after staying at
the bottom of the 0 to 100 scale for seven straight months through March
2009.

In March, the coincident DI was above the key 50 level for the 11th
straight month. In May 2009 it rose above the threshold for the first
time in 15 months.

A reading above 50 points indicates an economic expansion, while a
reading below 50 suggests a contraction.

The diffusion index of leading indicators, which measures the state
of the economy three months ahead: Mar revised down to 90.9 (preliminary
100.0) vs. Feb 90.9. In May 2009, it popped above 50 for the first time
in 23 months and has stayed above the key level.

The lagging DI, which reflects economic conditions three months
before: Mar unrevised to 100.0 (preliminary 100.0) vs. Feb 60.0.

The composite index has replaced the diffusion index as a prime
indicator for business conditions.

The DI simply shows which way the economy is headed while the CI
also indicates how strong the changes in business conditions have been
or will be.

To signal a clear change in business cycles, the coincident
composite index’s seven-month moving average must show a cumulative
shift in the opposite direction by at least a full standard deviation in
the past month or three months (by at least 0.52 point), according to
the Cabinet Office’s criteria.

And to signal an improvement, the coincident CI’s three-month
moving average must show a cumulative shift in the opposite direction by
at least a full standard deviation in the past month or three months (by
at least 0.60 point).

In October 2009, the three-month moving average for the coincident
CI rose by 1.43 points from September after the seven-month moving
average of the coincident CI gained 1.14 points in September from
August, both clearing the hurdles.

tokyo@marketnews.com
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