Bottoming out in Japan?

All this is certainly great;even uplifting.

News of 'bottoming out' was flashed out in Tokyo today (9 June 2009) and this has buoyed the Nikkei and feelings are good all round for the world's second biggest economy.

What has caused this optimism?

Indices.Two key Japanese economic indicator indexes rose in April. As such the government is of the view that recessionary pressures are abating. They are confident that the signs of the economy bottoming out is in the offing, adding that the worst is past.

The indexes of coincident and leading economic indicators each rose 1.0 point in April from March, and this has caused the Cabinet Office to raise its assessment — based on the coincident index — to say that while the economy was worsening, there were signs of it bottoming out.

"What's important is the improvement in the leading index as it shows we'll see an even clearer recovery in the coincident index," said Susumu Kato, chief economist at Calyon Capital Markets Japan.

"Judging from the coincident index, there is a chance that March was the bottom for Japan's economy."

But Finance and Economics Minister Kaoru Yosano was cautious about the outlook for the world's No. 2 economy, warning that despite a recent rally in stock prices, the government needs to be ready to act promptly in the face of downside economic risks.

Revised data is expected to show Japan's economy contracted 4.0 per cent in the first three months of this year, but economists expect it to grow 0.5 per cent in the current quarter after four straight quarters of contraction. — Reuters