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By HaleStewart July 31, 2014 8:46 am
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Japanese Industrial Production Is Sending Concerning Signals

While not the most prominent indicator used in the Conference Board's leading index for Japan (it only accoounts for 9% of the index), industrial production is still a very important indicator of current current business activity.  Unfortunately, as the charts from the latest report show, this indicator is sending concerning signals about the health of the Japanese economy.

As the chart shows, the index had a strong rise lasting about a year and half that lasted though all of 2013.  This rose as a result of Abenomics.  However, since the first of the year, the index has dropped -- and not at a slow rate. 

In addition, none of the various sub-indexes are showing any improvement.

The graph above shows four different sub-indexes -- none of which are increasing.  In fact, three (iron and steel, fabricated metals and general purpose machinery) are showing decreases since the first of the year.

And above there are 10 different sectors.  Again -- none are increasing.  In fact, three (chemicals, plastics and petroleum/coal) have dropped sharply.

If these indicators dipped for a mere month, we could chalk it up to statistical noise.  However, we are seeing overall declines that have lasted since the first of the year along with large drops in several sectors that are very concerning.

Hale Stewart is a former bond broker who has been writing about economics and financial markets since 2006 on the Bonddad Blog.  He is also a tax attorney with a domestic and international practice while also forming and managing captive insurance companies for US companies.   You can follow him on twitter at:@captivelawyer 



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