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Sept. Japan key economy gauge shows 9 mo. of contraction.

TOKYO, Nov. 5 Kyodo

(EDS: ADDING DETAILS, COMMENTS)

The government said Monday its key gauge of the state of the economy remained below the boom-or-bust line of 50% in September for the ninth month in a row.

The coincident index, designed to measure the current state of the economy, stood at 12.5% in the reporting month after marking zero in August, the Cabinet Office said in a preliminary report.

''Coincident indexes in recent months suggested the Japanese economy has been in a 'severe' situation. The possibility is high that the coincident index for October will stay below 50%,'' Cabinet Office economist Yoshihiko Senoo said.

A reading under 50% is considered a sign of economic contraction and a figure above that is viewed as a sign of expansion, according to Cabinet Office economists.

Business performance declined for seven of the eight components surveyed in the coincident indicator. Of the eight, only sales at department stores were up, the first gain since June.

But Senoo said that does not necessarily mean department stores' business is recovering and instead it only indicates shoppers who had gone to stores that had recently closed went to other existing ones.

The slumping seven components include power demand by large-lot users and production, consumption and employment-related components.

Production marked a decline for the ninth month in a row. Reduction of automobile and personal computer output in particular helped September's decline, Senoo said.

The index of leading economic indicators, a measure of economic growth six to nine months ahead, came to 37.5%, compared with a revised 50.0% in August. The figure for September marked the first dip below 50% since June.

Of the eight components covered in the leading indicator, performance improved in construction starts, housing starts and money supply, the Cabinet Office said.

The lagging index, which gauges performance in the recent past, was 20.0%, compared with 14.3% in August. The September lagging index slipped below 50% for the second month following August.

The indexes of coincident, leading and lagging indicators compare the current levels of various economic indicators with their levels three months earlier.
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Publication:Japan Policy & Politics
Date:Nov 12, 2001
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