The coincident index, a measure to identify the current state of the economy, increased to 89.6 from 88.6 in June, representing the fourth consecutive month of increase. It was expected to rise to 89.
Further, the leading index, which is used to anticipate changes in the direction of the economy, rose to 83 in July from 80.9 in the preceding month. Economists expected a reading of 81.9. The index rose for the fifth consecutive month in July.
However, the lagging index that is used to confirm turning points and business cycle phases, dropped to 82.4 from 84.1 recorded May and June.
The Japanese economy pulled out of its worst recession since World War II in the second quarter on government stimulus measures and strong exports. Real gross domestic product expanded 3.7% on an annualized basis during the three months to June, after shrinking for four straight quarters.
A day earlier, the Cabinet Office said in its monthly economic report for September that the Japanese economy is showing movements of picking up recently despite being in a difficult situation such as a rise in the unemployment rate to an all-time high. The jobless rate hit 5.7% in July, up from 5.4% in June.
However, the government expects the economy to pick up, reflecting completion of inventory adjustment, effects of the policy packages and improvement of external economic conditions.
But, calls for a gradual withdrawal of stimulus measures have risen. Bank of Japan board member Miyako Suda said on Wednesday that the need for extraordinary measures is diminishing as corporate financing conditions improved recently.
In a speech in Nagasaki, Suda said, “We should not underestimate the drawbacks” of unconventional steps.” She added that continuing these abnormal measures for a long time could harm self-correcting mechanism of market.
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