Japan’s coincident economic index—a key gauge of current economic conditions based on indicators such as industrial production, employment, and retail sales—was revised down to 117.9 in May 2026 from an initial estimate of 118.5. The latest reading also slipped slightly below April’s 118.1, indicating a modest loss of economic momentum.
The slowdown largely reflected the impact of heightened tensions in the Middle East, which dampened business activity and trade. Both exports and imports were broadly flat in May, industrial production showed no growth, and housing construction weakened.
Consumer confidence remained subdued, even as there were tentative signs of improving private consumption, supported in part by Japan’s record-high fiscal 2026 budget. At the same time, the Bank of Japan left its short-term policy rate unchanged at 0.75% in April but raised its inflation outlook, citing higher energy costs and persistent underlying price pressures.
