Japan's economic index climbs above critical level

Associated Press

TOKYO — A closely watched economic barometer came in well above a critical level for the first time in five months, suggesting that Japan may be in for a respite from its most severe slump in decades.

The index of leading economic indicators, which measures the prospects for growth in six to nine months' time, was at 71.4 in May, up from 33.3 in April, the Cabinet office said yesterday.

The government considers a reading above 50 to auger short-term economic expansion, while anything below 50 indicates the possibility of contraction.

The data in May exceeded the average forecast of economists surveyed by Dow Jones Newswires, who expected the index would be about 57.1.

It was the strongest showing for the leading index since October 2000, when its was 77.8.

But there also were signs in the latest report that the world's second-largest economy remains weak.

The government said the coincident index, which gauges the current state of the economy, stood at 25.0, hovering below 50 for the fifth straight month. It was 10.0 in April.

Japan's economy is suffering from its worst slowdown since the end of World War II, despite government efforts to revive it through public-works spending.