26.02.202605:06:41UTC+00Japan Coincident Index Confirmed at 4-Month Low

Japan’s coincident economic index, which tracks factory output, employment, and retail sales, slipped to 114.3 in December 2025, falling short of the flash estimate of 114.5 and down from 114.9 in November, its lowest reading since August. The decline underscores mounting pressure on the auto industry and related sectors stemming from U.S. trade policies. Nevertheless, the economy is still recovering at a moderate pace, supported by Prime Minister Sanae Takaichi’s sweeping fiscal package announced in November to ease household burdens, stimulate growth, and offset rising prices. On the monetary side, the Bank of Japan raised its key short-term interest rate by 25 basis points to 0.75% in December, its second hike of the year, signaling a cautious move away from ultra-loose policy. Even so, policymakers emphasized that real interest rates remain “significantly negative” and overall financial conditions are still broadly accommodative.