Japan Coincident Index

Japan’s coincident economic index rose slightly to 118.8 in August 2026 from a flash estimate of 118.7, but fell from 120.6 in the previous month, marking the lowest reading since May. The index, which tracks current economic conditions, reflected the impact of natural disasters and disruptions linked to tensions in the Middle East. Despite this, the economy continued to recover moderately, supported by improving employment and income conditions, government measures boosting private consumption, and stronger business investment. However, firms remained cautious about the outlook. Meanwhile, the Bank of Japan held its short-term policy rate at 1.0% in July, the highest since September 1995, while signaling scope for further hikes as underlying inflation approaches its 2% target and financial conditions remain accommodative.

Japan’s coincident economic index, a key gauge of current economic conditions based on indicators including industrial production, employment and retail sales, fell to 118.7 in August 2026 from a final 120.6 in the prior month, preliminary data showed. The reading was the lowest since May, reflecting the impact of natural disasters and disruptions stemming from the situation in the Middle East. Despite the monthly decline, the economy continued to recover moderately, supported by improving employment and income conditions and recent government policy measures that boosted private consumption. Business investment also picked up, although firms remained cautious about the outlook. Meanwhile, the Bank of Japan kept its short-term policy rate at 1.0% in July, the highest since September 1995, while signaling scope for further rate hikes as underlying inflation approaches 2% and financial conditions remain supportive.

Japan’s coincident economic index, a key gauge of current economic conditions based on indicators including industrial production, employment and retail sales, stood at 120.6 in July 2026, matching the flash reading and reaching its highest level since October 2018. The result pointed to a solid recovery in economic activity, supported by government measures to contain fuel and oil price increases linked to Middle East tensions, alongside a new fiscal policy framework aimed at balancing growth with budget sustainability. Meanwhile, the Bank of Japan kept its short-term policy rate at 1.0% in July, its highest level since September 1995, while judging risks to economic activity to be broadly balanced.