Composite Index (Leading and Coincident) in Japan

Japan's Composite Indexes of Business Conditions (景気動向指数, CI), compiled by the Cabinet Office, condense into a single figure the movement of many economic indicators -output, employment, sales, profits, interest rates, equities and more-. The Leading index anticipates turning points in the cycle, while the Coincident index reflects the current state of the economy. Base 2020=100.

Each index is built by averaging the standardised rates of change of its components -around eleven in the Leading and ten in the Coincident, such as industrial production, shipments, hours worked and retail sales- and chaining the result into an index level based on 2020=100. The Cabinet Office publishes a Preliminary reading (速報) and, the following month, a Revised one (改訂).

The Coincident index is the official reference for determining whether the Japanese economy is expanding or contracting, accompanied by a qualitative assessment from the Cabinet Office itself. The Leading index is used to anticipate turning points several months ahead and is followed by the Bank of Japan and markets as an early cyclical signal.

The indices are revised each month, as the Preliminary reading is replaced by the Revised one and historical levels can be recalculated in cascade as components are updated. Any given month's value may therefore change in later releases.