Key gauge of economy again shows bust

A key gauge of the current state of the economy stayed below the boom-or-bust line of 50 percent in November for the fourth straight month, a sign that the nation's economic recovery has stalled, according to government data released Tuesday.

The index of coincident economic indicators stood at 44.4 percent for the reporting month, the Cabinet Office said in a preliminary report, citing slumping production amid continued adjustments in the information technology sector.

It marks the first time since the period from November 2001 to February 2002 that the index has stayed below the 50 percent line for four straight months.

A reading above 50 percent is considered a sign of economic expansion. A figure below it is seen as a sign of contraction.

A Cabinet Office official said the economy has recently been weakening, and the index was likely flirting with the threshold in December, having been sandwiched between sluggish industrial output and improving consumption and employment.

Hitoshi Asaoka, an economist at Mitsubishi Research Institute Inc., said, "Given slowing exports and the adjustment in the IT sector, which I think has proceeded smoothly, the index is likely to hover around the line in the coming months."

Asaoka said he does not see the economy undergoing a sharp slowdown, and that it will gather steam around June after overcoming the current soft patch, which primarily stems from inventory and production adjustment in the IT sector.

The index of leading indicators, which predicts economic developments about six months ahead, came to 30 percent, marking its third straight month below the threshold.

The index of lagging indicators, designed to measure economic performance in the recent past, came in at 100 percent, above the threshold for the third consecutive month.

Of the 11 indicators used to calculate the coincident index, nine indicators were available for the preliminary report.