February: The Recession Indicator falls to 63.9%
－ The probability is below the warning level for a recession
The Recession Indicator for Japan in February 2023 released by the Japan Center for Economic Research (JCER) is 63.9%, down from 84.7% (retroactively revised basis) in the previous month (Figure 1). Based on the Leading Index, this probability indicates the likelihood of entering a recession in the months ahead. The Leading Index in February rose for the first time in 4 months due to improvements in inventory ratio of producer goods for mining and manufacturing, sales forecast of small businesses, stock prices (TOPIX), and others. As a result, the probability declined for the three consecutive months on a retroactively revised basis, falling below the warning level of 67% for a recession for the first time in 10 months.
【Figure 1. The Recession Indicator (February 2023)】
【Table 1. The Recession Indicator and the Leading Index (over the last year)】
* The estimation method of the Recession Indicator has revised since the release in July 2020. Please refer to here for more details.
－ Aggravated Index of Inventory Ratio of Finished Goods influenced the probability.
－ Deterioration of the employment situation could be a factor.
－ Huge probability reduction contributed by the well-performed indices of an inventory ratio
－ Exceeding the warning level due to the stock pile-up resulting from the dismal foreign demands.
－ The probability almost stayed at the previous month's level.