Reply #78: Japan's Leading Index Signals Economic Slowdown for Fifth Month [View All]

[Ghost Dog]

Feb. 6 (Bloomberg) -- Japan's economic expansion is likely to stall amid fallout from the U.S. slowdown, the government's broadest indicator of future growth signaled for a fifth month.

The leading index was at 40 percent in December, below the threshold of 50 that signals growth will slow in the next three to six months, the Cabinet Office said today in Tokyo. The result matched the median estimate of 32 economists surveyed.

Manufacturers plan to cut production as export growth slows, and consumer confidence at a four-year low suggests spending at home is unlikely to make up for the drop in overseas demand. The risk of a slowdown has probably taken an interest-rate increase by the Bank of Japan off the table.

``The Japanese economic outlook could become increasingly fragile in the first half of the year,'' said Hiromichi Shirakawa, chief economist at Credit Suisse Group in Tokyo. ``The growing risk of a domestic recession is likely to prevent the Bank of Japan from hiking rates before the middle of 2009.''

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