Japan Coincident Index

Japan’s coincident economic index, which tracks factory output, employment, and retail sales, fell to 114.5 in December 2025 from 114.9 the previous month, according to flash data. It marked the lowest reading since August, underscoring the drag from U.S. trade policies on sectors such as autos. Even so, the broader economy continues to recover at a moderate pace, supported by Prime Minister Sanae Takaichi’s JPY 21.3 trillion fiscal package unveiled in November to ease household burdens, spur growth, and counter rising prices. On the monetary front, the Bank of Japan raised its key short-term rate by 25bps to 0.75% in December, its second hike of the year, signaling a cautious move away from ultra-loose policy. Still, policymakers emphasized that real rates remain “significantly negative” and overall financial conditions broadly accommodative.