Japan’s Leading economic indicator rose for the fourth straight month in July, with the index rising to 83.0 from a revised reading of 80.9 in June amidst expectation for a rise to 81.9. At the same time, the Coincident index rose to 89.6, surpassing expectations of a rise to 89, and the data encourages an improved outlook for the world’s second largest economy as it emerges from the worst recession since World War II. However, as the outlook for global growth remains weak, market participants speculate that the DPJ, the new ruling party in Japan, may increase government spending to ease tightening credit conditions and to encourage consumer spending while combating the downside risks for inflation.
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