Japan’s CEIC Leading Indicator dropped to 100.2 in July from 102.4 in June. This marked the third consecutive month of deceleration for the non-smoothed indicator, although it still remains above the threshold of 100. The smoothed indicator dropped to 100.6 from 101.4 and has been decelerating since October 2021, signalling that Japan’s business cycle is currently in a cooldown phase with the peak having likely passed in the second half of 2021. Motor vehicle sales declined for the twelfth consecutive month, although the 7.5% y/y registered in July is the lowest decrease over this period. Consumer confidence for overall livelihood fell to its lowest level since May 2020 amid price hikes for essential commodities such as food, fuel, and electricity. Corporate manufacturing sentiment remained almost unchanged in July. OECD’s CPI based real effective exchange rate (REER) dropped again in July, falling to its lowest level since 1973. Japan’s TOPIX small index closed July at 2,288.2, the strongest since December and essentially regaining lost ground since the start of 2022.

India’s CEIC Leading Indicator decelerated sharply in July, by 9.1 points, to 101.6. The indicator remained in the expansionary phase above the 100 threshold, albeit inching closer to the contraction phase. The value of the CEIC Leading Indicator was primarily dragged down by the wholesale food inflation, followed by electricity generation, steel production, vehicle production, and money supply. The growth in the wholesale price index for food slowed to 9.4% in July, from 12.4% in the previous month. Electricity generation grew by 2.5% y/y in July, slowing sharply from 16.9% y/y, also dropping in actual terms to KWh 118.9bn. Crude steel production witnessed a slowdown in its growth, to 2.2% y/y from 6.3% y/y. Production of automobiles grew for a fourth consecutive month in a row to 2.2mn units, reaching the highest level since March 2021, and growing by 4.7% y/y in July as the low base dissipated. Money supply grew by 9.2% y/y in July, picking up from 8.7% y/y in June, but the contribution to the CEIC leading indicator was negative. On the bright side, the Bombay Stock Exchange S&P Sensex mitigated the deceleration in the CEIC leading indicator the most, as the equity market climbed upwards throughout the month of July 2022. The index recorded a growth of 8.6% m/m, marking the highest value since March 2022, driven by a return of foreign investors on the back of good profits posted by several companies, as well as the second consecutive decline in the US GDP. The 91-day treasury bills yield increased to 5.6% p.a., due to monetary tightening, elevated inflation, and growing demand for government bonds in this new era of uncertainty. The increase in the yield was accompanied by a decline in the total amount outstanding, by 5.7% y/y in July, although the decline narrowed from 10.4% y/y over the previous month. The sharp deceleration in the actual CEIC Leading Indicator pulled down the smoothed CEIC Leading Indicator, which dropped to 107.5 in July, from 109.4 in June. Due to its dynamic nature, the smoothed indicator reflects a third consecutive decline since April 2022, capturing the impact of worsening supply shocks, as well as heightened inflation. Resultantly, India’s economic growth is expected to be lower than what it could have been, although a resilient consumer demand and an uptick in industrial activity bodes well for the economy.

The CEIC Leading Indicator for Indonesia registered its sharpest drop since the first wave of the COVID-19 pandemic. The non-smoothed indicator dropped by 12.5 points in July 2022 to 103.4. The July performance also marked the fourth consecutive month of deceleration in the non-smoothed indicator, although it registered high values in the first half of the year and was among the best performing economies surveyed by the CEIC Leading Indicator. July’s decline was influenced by a sudden drop in median crude palm oil prices, which fell to USD 1,285.8 per tonne from USD 1,653.5 in June, on the back of a desire to ease the high inventory of the commodity. The lower price of palm oil affected Indonesia’s non-oil and gas exports whose growth decelerated to 31.6% y/y in July. Motor vehicle sales returned to double-digit growth in July, increasing by 29.4% y/y, with sales being boosted by a luxury tax discount of 66% for vehicles costing up to IDR 200mn. The rupiah depreciated to its lowest level since April 2020, trading at IDR 14,958 per USD, as the Bank of Indonesia is still keeping interest rates unchanged despite inflationary pressures. The Jakarta composite stock exchange index closed July at 6,951.1, barely changed compared to June’s closing value. The smoothed CEIC Leading Indicator fell to 111 in July, but remains firmly above the threshold value of 100, separating expansion from contraction. However, if the deceleration trend continues, it could be assumed that the business cycle peak passed in Q2 2022.

The CEIC Leading Indicator for Russia was the only one which registered a monthly increase in July, rising by 0.5 points to 93.1. High oil prices in July continued to support the Russian economy amid heavy Western sanctions due to the ongoing war in Ukraine, although the average crude oil price was slightly lower compared to June, at USD 108.9 per barrel. Passenger car sales, however, continued to deteriorate strongly, falling by 75.6% y/y, as a consequence of both low demand and a shortage of supply parts for producers due to the sanctions. Manufacturing production tendency improved slightly in July but is still far from the pre-war readings. The RTS stock exchange index closed July at 1,129.2, down 16% m/m and effectively erased the gains in May and June.