Japan cuts economic view after key indicator falls to lowest in a year

© Reuters. FILE PHOTO: People walk at a crossing in Shibuya shopping area, amid the coronavirus disease (COVID-19) pandemic, in Tokyo, Japan August 7, 2021. REUTERS/Androniki Christodoulou

By Yoshifumi Takemoto and Kantaro Komiya

TOKYO (Reuters) – Japan cut its view on economic conditions for the first time in more than two years after the coincident indicator index extended its decline in September, falling to the lowest in a year.

The index showing current economic conditions, compiled from data including factory output, employment and retail sales, slipped a preliminary 3.8 points from the previous month to 87.5, the Cabinet Office said, marking the third consecutive month of decline. The fall was biggest since May 2020.

The government on Monday lowered its assessment of the index to “weakening” from “improving” in its first downgrade since August 2019.

Stagnant shipments of cars and its components as well as slowing exports and factory output – dragged down by the auto industry – contributed to the index’s fall, a government official told a news conference.

The index of leading economic indicators, used to predict the direction of the economy a few months ahead, decreased 1.6 points in September to 99.7, the government also said.