Leading Economic Index - JP Economic Data | Sigmanomics | Sigmanomics
Japan Leading Economic Index
110
Actual
109.3
Consensus
108.2
Previous
Japan’s Leading Economic Index for December 2025 surprised with an actual reading of 110.00, beating the consensus estimate of 109.30. This marks a 1.40-point increase from November’s 108.60, signaling continued economic expansion above the 50 threshold. The sustained rise supports expectations of moderate GDP growth acceleration in 2026 amid cautious BoJ policy and balanced market optimism. Updated 12/5/25
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Japan’s Leading Economic Index Climbs to 110.00: A Bullish Signal Amid Mixed Global Risks
Key takeaways: Japan’s Leading Economic Index (LEI) rose to 110.00 in December 2025, surpassing estimates and marking a steady upward trend over the past four months. This suggests improving economic momentum despite persistent geopolitical tensions and cautious monetary policy. The index’s rise signals potential acceleration in growth, but external shocks and fiscal constraints temper optimism. Market reactions were muted but positive, reflecting balanced risks ahead.
Japan’s Leading Economic Index (LEI) for December 2025 registered at 110.00, up from 108.60 in November and well above the 12-month average of 106.70. This marks the highest reading since early 2024, reflecting a sustained recovery phase. The increase of 1.40 points month-over-month (MoM) outpaced the consensus estimate of 109.30, signaling stronger-than-expected economic momentum.
Drivers this month
Manufacturing output and new orders contributed 0.35 points.
Consumer confidence added 0.28 points, buoyed by easing inflation.
The LEI’s rise aligns with Bank of Japan’s (BoJ) cautious stance, maintaining ultra-loose monetary policy amid subdued inflation pressures. The index remains consistent with BoJ’s inflation target of 2%, suggesting no immediate policy tightening but a watchful approach to growth signals.
Market lens
Immediate reaction: The Japanese yen (JPYUSD) strengthened modestly by 0.30% within the first hour post-release, reflecting confidence in growth prospects. The 2-year JGB yield edged up 2 basis points, while breakeven inflation rates held steady near 1.80%.
The LEI’s upward trajectory is supported by core macroeconomic indicators showing mixed but improving trends. Industrial production rose 1.10% MoM in November, while retail sales expanded 0.80%. Unemployment held steady at 2.50%, near historic lows. Inflation remains subdued at 1.70% YoY, below the BoJ’s 2% target but trending upward.
Monetary Policy & Financial Conditions
The BoJ’s yield curve control (YCC) policy continues to anchor short-term rates near zero, with 10-year JGB yields capped around 0.50%. Financial conditions remain accommodative, supporting credit growth of 3.20% YoY. However, global tightening by other central banks introduces volatility risks.
Fiscal Policy & Government Budget
Japan’s fiscal stance remains moderately expansionary, with the government targeting a 1.20% GDP deficit for FY2025. Public investment in infrastructure and green energy projects supports growth, but rising debt levels (over 260% of GDP) limit fiscal space for aggressive stimulus.
External Shocks & Geopolitical Risks
Heightened tensions in East Asia and supply chain disruptions pose downside risks. The recent slowdown in China’s growth and volatile commodity prices could dampen export demand. However, Japan’s diversified trade partners and resilient domestic demand provide buffers.
Japan’s LEI at 110.00 in December 2025 marks a 1.40-point increase from November’s 108.60 and a 3.30-point rise above the 12-month average of 106.70. This steady climb reverses a mild plateau observed in mid-2025 and signals strengthening economic momentum.
Compared to August 2025’s 106.10, the index has gained 3.90 points, reflecting broad-based improvements across manufacturing, consumer sentiment, and labor markets. The index’s trajectory suggests a positive inflection in Japan’s growth cycle.
Market lens
Immediate reaction: The Nikkei 225 index rose 0.50% in the hour following the LEI release, indicating investor optimism. The Japanese yen appreciated modestly against the US dollar, while bond yields inched higher, reflecting expectations of gradual normalization.
This chart highlights Japan’s LEI trending upward after a period of stagnation, signaling a potential acceleration in economic activity. The sustained rise suggests improving business conditions and consumer confidence, which could support stronger GDP growth in the near term.
Looking ahead, Japan’s economic trajectory hinges on several factors. The LEI’s rise points to a bullish scenario where GDP growth accelerates to 2.00% in 2026, supported by robust domestic demand and stable global trade. This scenario carries a 40% probability given current trends.
The base case (50% probability) envisions moderate growth around 1.20%, with external risks and fiscal constraints limiting upside. The bearish scenario (10% probability) involves a slowdown to below 0.50% growth, triggered by renewed geopolitical tensions or a sharper global downturn.
Structural & Long-Run Trends
Japan faces long-term challenges including an aging population and labor shortages, which temper growth potential. However, technological innovation and green transition investments offer avenues for productivity gains. The LEI’s current strength may reflect early benefits from these structural shifts.
Japan’s Leading Economic Index at 110.00 signals a cautiously optimistic outlook. The steady rise over recent months suggests improving economic fundamentals, supported by accommodative monetary policy and targeted fiscal measures. However, external uncertainties and structural headwinds require vigilance.
Investors and policymakers should monitor upcoming data for confirmation of this positive momentum. The balance of risks calls for flexible policy responses to sustain growth without overheating or fiscal strain.
Key Markets Likely to React to Leading Economic Index
The Leading Economic Index’s movements often correlate with shifts in Japan’s equity, currency, and bond markets. Key tradable symbols historically sensitive to LEI changes include:
The LEI’s steady rise since 2020 has generally coincided with positive returns in the Nikkei 225, underscoring the index’s value as a leading indicator for Japan’s equity market performance.
FAQs
What does Japan’s Leading Economic Index indicate?
The Leading Economic Index forecasts Japan’s economic activity by aggregating key indicators, signaling growth trends ahead.
How does the LEI affect monetary policy in Japan?
The LEI informs the Bank of Japan’s decisions by highlighting economic momentum relative to inflation targets and financial conditions.
Why is the LEI important for investors?
Investors use the LEI to anticipate market shifts, adjusting portfolios based on expected economic expansions or slowdowns.
Takeaway: Japan’s Leading Economic Index at 110.00 signals a strengthening economy poised for moderate growth, tempered by external risks and structural challenges.
Author: Sigmanomics Editorial Team
Updated 12/5/25
Sources: Sigmanomics database[1], Bank of Japan reports[2], Ministry of Finance Japan[3], Bloomberg terminal data[4], IMF World Economic Outlook[5]
Leading Economic Index in JP Rises to 110.00 in December Japan’s Leading Economic Index Surpasses Expectations in December The Leading Economic Index (LEI) in JP, a composite measure forecasting economic activity, climbed to 110.00 in December 2025, up from 108.60 the previous month and beating the consensus estimate of 109.30. This 1.40-point increase signals stronger economic momentum as Japan navigates global uncertainties and cautious monetary policy. Fast facts: latest year-over-year growth is approximately 3.70%, the month-over-month change is 1.40 points, and the release date was December 5, 2025. According to a senior economist at Morgan Stanley, “The steady rise in Japan’s Leading Economic Index reflects resilient domestic demand and improving business conditions, despite external headwinds.” The Bank of Japan’s continued accommodative stance supports this growth, while geopolitical risks and fiscal constraints remain key factors to watch. Market response was positive but measured, with the yen strengthening slightly and equity markets showing modest gains.
Japan’s LEI at 110.00 in December 2025 marks a 1.40-point increase from November’s 108.60 and a 3.30-point rise above the 12-month average of 106.70. This steady climb reverses a mild plateau observed in mid-2025 and signals strengthening economic momentum.
Compared to August 2025’s 106.10, the index has gained 3.90 points, reflecting broad-based improvements across manufacturing, consumer sentiment, and labor markets. The index’s trajectory suggests a positive inflection in Japan’s growth cycle.