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A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

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Oct 27 2015

Japan’s Industrial Output Contracts, Raising Recession Fears

There is increasing concern that Japan’s Q3 GDP will show further contraction, following negative second-quarter GDP growth. Making matters worse, year-over-year industrial production (IP) growth fell to -0.4% in August – well below consensus expectations – prompting the government to highlight the recent weakness in its monthly economic report, and heightening the unease surrounding manufacturing growth prospects.
 
This weakening in Japanese industrial growth is confirmed by the decline in the growth rate of ECRI’s Japanese Coincident Manufacturing Index (JACMI), a more comprehensive measure of manufacturing activity than IP. In recent months, JACMI growth has eased, as predicted by the earlier downturn in Japanese Leading Manufacturing Index (JALMI) growth. Over its history dating back to 1953, turning points in JALMI growth have consistently led those in JACMI growth.

ECRI’s latest report features the updated JALMI, alongside the JACMI, in order to assess the outlook for the vital manufacturing sector which, accounting for about 20% of GDP, has broader implications for the overall Japanese economy.

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Double-Digit Imported Deflation

ECRI September 23, 2015

Six years ago — the last time global import price deflation was this intense — the worst global recession in decades was ending. More