Japan’s Coincident Indicator MoM rose 0.50%, missing the 1.80% consensus but improving from October’s -1.30%. This modest gain signals ongoing expansion, though below the 12-month average of 0.70%, reflecting steady yet cautious economic momentum. Market focus will remain on export trends and BoJ’s accommodative policy as growth faces structural and external headwinds. Updated 12/5/25
Coincident Indicator Mom - JP
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Japan’s Coincident Indicator MoM: December 2025 Release and Macro Outlook
The latest Coincident Indicator MoM for Japan, released on December 5, 2025, showed a modest increase of 0.50%, falling short of the 1.80% consensus estimate but improving from the -1.30% contraction recorded in October. This data point, sourced from the Sigmanomics database, offers a nuanced view of Japan’s current economic momentum amid evolving domestic and global challenges. This report contextualizes the latest reading against historical trends, monetary and fiscal policies, external shocks, and market sentiment to provide a forward-looking macroeconomic assessment.
Japan’s Coincident Indicator MoM rose 0.50% in December 2025, signaling a moderate rebound after a sharp decline of -1.30% in October. This indicator, which aggregates key economic variables, reflects the current state of economic activity and is crucial for gauging near-term growth prospects.
Retail sales added 0.15 pp, supported by holiday season spending.
Employment conditions improved slightly, adding 0.08 pp.
However, sluggish export orders subtracted -0.05 pp amid global demand softness.
Policy pulse
The Bank of Japan (BoJ) maintains its ultra-loose monetary policy, with short-term rates near zero and yield curve control intact. The 0.50% rise in the indicator remains below the 12-month average of 0.70%, suggesting growth is steady but not accelerating enough to prompt tightening. Inflation remains below the 2% target, keeping the BoJ accommodative.
Market lens
Immediate reaction: The Japanese yen (JPY) weakened slightly against the USD, with USD/JPY rising 0.30% in the first hour post-release. The 2-year JGB yield edged up 2 basis points, reflecting mild market optimism but cautious sentiment.
The Coincident Indicator MoM is a composite of core macroeconomic indicators including industrial output, retail sales, employment, and real income. The 0.50% increase in December contrasts with the -1.30% drop in October and the -0.70% in September, marking a recovery phase after a volatile autumn.
Historical comparisons
August 2025 saw a 0.80% rise, the highest in the past six months, driven by strong domestic demand.
September and October’s declines (-2.60% and -1.30%) reflected external shocks including supply chain disruptions and weaker exports.
The current 0.50% gain is below the 12-month average of 0.70%, indicating moderate but uneven growth.
Monetary policy & financial conditions
The BoJ’s policy stance remains unchanged, with the policy rate at -0.10% and 10-year JGB yields capped near 0.25%. Financial conditions are accommodative, but global tightening by other central banks limits capital inflows. Credit growth remains subdued, reflecting cautious corporate investment.
Fiscal policy & government budget
Japan’s fiscal stimulus continues to support infrastructure and social spending, with the 2025 supplementary budget adding ¥5 trillion (~$37 billion). However, rising debt levels constrain further expansion. The government aims to balance growth support with fiscal sustainability.
The December 2025 Coincident Indicator MoM rose by 0.50%, up from -1.30% in October but below the 1.80% consensus estimate. This marks a reversal of the two-month decline but remains below the 12-month average of 0.70%. The chart shows a volatile pattern since August, with sharp swings linked to external shocks and domestic policy adjustments.
Compared to the September low of -2.60%, the latest print signals stabilization. However, the pace of recovery is slower than the summer rebound, reflecting persistent headwinds in exports and cautious consumer spending.
Market lens
Immediate reaction: USD/JPY rose 0.30%, while 2-year JGB yields increased by 2 basis points, indicating mild optimism tempered by uncertainty. Equity markets showed muted gains, with the Nikkei 225 up 0.40% in early trading.
This chart highlights Japan’s economic momentum as trending upward but with volatility. The indicator’s rebound suggests resilience, yet the below-average growth rate warns of ongoing structural challenges and external risks.
Looking ahead, Japan’s economic trajectory depends on multiple factors including global demand, domestic consumption, and policy responses. We outline three scenarios with probabilities:
Scenario analysis
Bullish (30% probability): Stronger global growth and easing geopolitical tensions boost exports and investment, pushing the indicator above 1.00% MoM by Q1 2026.
Base case (50% probability): Moderate recovery continues with steady domestic demand and stable external conditions, keeping growth near 0.50%-0.70% MoM.
Bearish (20% probability): Renewed global shocks or supply chain disruptions trigger another contraction, with the indicator falling below zero in early 2026.
Structural & long-run trends
Japan faces demographic headwinds and productivity challenges that limit long-term growth. The modest rebound in the Coincident Indicator reflects cyclical factors rather than a structural turnaround. Continued innovation, labor reforms, and fiscal prudence are essential for sustainable expansion.
The December 2025 Coincident Indicator MoM for Japan signals a cautious recovery after recent declines. While the 0.50% rise is encouraging, it falls short of expectations and remains below the year-long average. Monetary policy remains accommodative, but external risks and structural constraints temper optimism. Investors and policymakers should monitor upcoming data closely, especially export trends and consumer confidence, to gauge whether this recovery can gain momentum or stall.
Key Markets Likely to React to Coincident Indicator MoM
Japan’s Coincident Indicator MoM influences several asset classes that track economic momentum and policy shifts. The following markets typically respond to changes in Japan’s economic outlook:
9984.T – SoftBank Group’s stock is sensitive to domestic economic shifts and tech sector trends.
USDJPY – The currency pair reacts swiftly to economic data and BoJ policy signals.
BTCUSD – Bitcoin often moves inversely to risk sentiment influenced by macroeconomic conditions.
7203.T – Toyota’s stock reflects industrial production and export demand.
EURJPY – This pair tracks relative economic strength between Japan and Europe.
Indicator vs. USDJPY Since 2020
Since 2020, Japan’s Coincident Indicator MoM and USDJPY have shown a moderate inverse correlation. Periods of economic weakness often coincide with yen depreciation, as the BoJ maintains loose policy while global investors seek higher yields elsewhere. The chart below illustrates this dynamic, with USDJPY rising during indicator dips and stabilizing as economic momentum improves.
FAQs
What is the Coincident Indicator MoM for Japan?
The Coincident Indicator MoM measures monthly changes in key economic variables, reflecting Japan’s current economic activity.
How does the latest reading compare historically?
The 0.50% increase in December 2025 is a rebound from recent declines but remains below the 12-month average of 0.70%, indicating moderate growth.
What are the main risks to Japan’s economic outlook?
Risks include global demand shocks, supply chain disruptions, and structural challenges like aging demographics and low productivity.
Takeaway: Japan’s Coincident Indicator MoM signals a tentative recovery amid persistent headwinds. Policymakers must balance stimulus with structural reforms to sustain growth.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
Japan Coincident Indicator MoM Rises Modestly in December December Report Shows 0.50 Percent Growth Below Forecast The Coincident Indicator MoM measures monthly shifts in Japan’s core economic activity by combining data on industrial output, retail sales, and employment. For December 2025, Japan’s Coincident Indicator MoM increased by 0.50 percent, improving from October’s 1.30 percent decline but falling short of the 1.80 percent consensus estimate. This moderate gain signals a cautious recovery amid ongoing global uncertainties and domestic challenges. According to Morgan Stanley’s chief Asia economist, “The slower-than-expected rise in Japan’s Coincident Indicator MoM reflects persistent export headwinds and subdued consumer spending, despite steady industrial output.” The Bank of Japan’s continued accommodative stance supports growth, but external risks and structural issues keep momentum restrained. Market reaction was muted, with the Japanese yen weakening slightly against the US dollar following the release. Overall, the December reading suggests Japan’s economy is stabilizing but remains vulnerable to external shocks and internal reforms.
The December 2025 Coincident Indicator MoM rose by 0.50%, up from -1.30% in October but below the 1.80% consensus estimate. This marks a reversal of the two-month decline but remains below the 12-month average of 0.70%. The chart shows a volatile pattern since August, with sharp swings linked to external shocks and domestic policy adjustments.
Compared to the September low of -2.60%, the latest print signals stabilization. However, the pace of recovery is slower than the summer rebound, reflecting persistent headwinds in exports and cautious consumer spending.