Key Economic Indicator in Japan Improves for 11th Straight Month

Japan's coincident index, the broadest indicator of the condition of the nation's economy, improved by 0.4 percent in March, statistics released by the Cabinet Office on Tuesday.

The index, which combines data such as retail sales and manufacturing, stood at 100.7 according to preliminary statistics, where 100 is equal to average results from 2005.

The leading and lagging indices also improved last month, according to the data. The leading index, which shows the direction the economy is heading in, rose 1 point to 97.9, while the lagging index, improved 0.5 points to 85.4.

The indices demonstrate that strong exports and better sentiment are beginning to have an effect on conditions within Japan, as consumers become more willing to spend and employers gain the confidence to invest.

The Tankan survey, which asks business leaders for their views on the economy, improved to minus 14 in March, from minus 25 in December, demonstrating that employers are becoming more confident that conditions have improved, and they can start to spend money again on employees and equipment.

In recent months, Japan has experienced generally positive news on the economy, even as deflation continues to pose serious problems for both the government and the Bank of Japan (BOJ), which have had to take stimulus measures to keep the recovery in tact.

Analysts said, however, that the indices released Tuesday showed that the gradual improvements seen over the last few months are likely to slowly filter down to households and create the conditions for a sustainable recovery.