Japan's coincident index suggests economy may be in recession
TOKYO (Reuters) - Japan’s coincident indicator index declined in March
and the government cut its assessment of the economy, a sign it may
already be in recession as the U.S.-China trade war and weak external
demand hurt activity.
Worries about the economy have grown as Japan’s exports and factory
output were hit by China’s economic slowdown and the escalating
U.S.-China trade friction, which had disrupted global supply chains.
The
index of coincident economic indicators, which consists of a range of
data including factory output, employment and retail sales, fell a
preliminary 0.9 of a point in March from the previous month, the Cabinet
Office said on Monday.
In its view on the index, the government
described the economy as “worsening”. That compared with its previous
assessment for February when it described the economy at “a turning
point towards a downgrade”.
The
index for leading economic indicators is compiled using data such as
job offers and consumer sentiment and is seen as a forward-looking gauge
of the economy. It slipped 0.8 of a point from February.
Clouding
the outlook are government plans to raise a sales tax to 10 percent
from the current 8 percent in October unless a big shock on the scale of
Lehman Brothers’ collapse in 2008 hits the economy.
There is
also speculation Prime Minister Shinzo Abe may postpone the sales tax
hike as risks to demand grow, having already twice delayed it.
There
are concerns the sales tax increase will damage private consumption as
it did so when Japan raised the tax to 8 percent from 5 percent in 2014.
Japan
releases gross domestic product (GDP) data on May 20, which will give a
clearer read on the state of the economy and whether the government
will proceed with the tax hike as scheduled.
The economy likely
contracted at an annualized 0.2 percent in January-March as corporate
and consumer spending weakened, a Reuters poll showed.