January: The Recession Indicator rose to 24.7%
－ The Leading Index fell for the first time in four months
The Recession Indicator for Japan in January released by the Japan Center for Economic Research (JCER) rose to 24.7%, from 9.5% on revised retroactivity value in December (Figure 1). The Leading Index as the underlying data fell for the first time in four months, due to deteriorations in consumer confidence, the inventory ratio of producer goods for mining and manufacturing, sales forecast of small business and others. The COVID-19 variant 'omicron' surge after the new year pushed down the indicator related to consumption and production. Although the probability is still below the 67% level, which is a reference point of signaling a recession, there are concerns about greater downside risks to the economy, such as higher resource prices and financial market turmoil which are due to Russia's invasion of Ukraine.
【Figure 1. The Recession Indicator (January 2022)】
【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.
－ 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.
－ New housing construction and stock prices contributed to the improvement