Japan's key economic index up for 2nd straight month in March

Japan's key economic index rose in March for the second straight month as the sharp depreciation of the yen and higher stocks improved consumer sentiment, prodding manufacturers to boost production, the government said Thursday.

The index of coincident indicators, such as industrial output, retail sales and new job offers, climbed to 93.3 from 92.5 in February, against the 2005 base of 100, the Cabinet Office said in a preliminary report.

The government left its basic assessment of the index unchanged for the second month in a row, saying it indicates the country's economy has "bottomed out."

A Cabinet Office official said the assessment would be upgraded to "signaling a possible turning point," if the coincident index's seven-month moving average, which turned positive in March for the first time in nine months, continues to gain in the months to come.

Meanwhile, the index of leading indicators, which predicts developments in the coming few months, slid for the first time in four months -- to 97.6 from 97.7.

The official said, however, that the result did not suggest economic recovery hopes had waned, given that the index dropped only 0.l point from the previous month.

Japan could return to a recovery path on the back of the effects of Prime Minister Shinzo Abe's economic policies, dubbed "Abenomics," centering on drastic monetary easing and large-scale public works projects, some analysts have said.

As speculation grew that the Bank of Japan would act to make financial conditions more accommodative, the yen weakened against the U.S. dollar by 16.1 percent on an average basis in March from a year earlier, the Finance Ministry said, sparking expectations the nation's exports, a key engine of growth, could rebound.

In the same month, the broader Topix index of all First Section issues on the Tokyo Stock Exchange was up 7.0 percent from the previous month on a monthly average basis, after increasing 6.6 percent in February, government data showed.

The index of lagging indicators, measuring economic performance in the recent past, rose to 87.1 in March from 86.0.