2026.04.0705:05:20UTC+00Japan Coincident Index Eases

Japan’s coincident economic index, which tracks factory output, employment, and retail sales, slipped to 116.3 in February 2026 from a revised 117.9 in January, when it had reached its highest level since May 2019, flash estimates showed. The decline underscored persistent external headwinds, particularly from U.S. trade policies and volatility in financial and capital markets, even as the domestic economy continued to recover at a moderate pace. Business sentiment remained broadly unchanged, weighed down by weak industrial production and exports. Nevertheless, improving labor market and income conditions helped underpin consumer spending, partially offsetting softer household sentiment. On the policy front, the Bank of Japan left its short-term policy rate unchanged at 0.75% in January but indicated that additional rate increases could be warranted if its projections for economic activity and inflation are realized.