A key gauge of the current state of Japan's economy stood above the key threshold of 50 percent in June for the second straight month, the government said Friday, raising optimism over the recovery course of the world's second- largest economy.

The index of coincident economic indicators stood at 100.0 percent, up from 60.0 percent in May, the Cabinet Office said in a preliminary report.

A reading above 50 percent is considered a sign of economic expansion. A figure below that line is seen as a sign of contraction.

Of the 11 indicators used to calculate the coincident index, nine were available for the preliminary report and all marked positive readings for the first time in five months.

Of the nine, industrial output, sales of small and midsize companies and the ratio of job offers to job seekers logged the highest readings since the current economic recovery starting in January 2002.

The upbeat reading, together with positive outlooks, led the Cabinet Office to upgrade its assessment of the current economic situations for the first time in five months.

Chief Cabinet Secretary Hiroyuki Hosoda was in high spirit when asked about the results of the latest economic indicators and the likelihood for the government to declare that the economy has come out of the leveling-off stage Monday, when it adopts its monthly economic report.

"It's now becoming such an amusement to see it happen," the top government spokesman said at a press conference in referring to the economy breaking away from the prolonged lull.

However, Hosoda said it is still premature for the government to "say with certainty that the economy has pulled out of the leveling-off stage and has entered a rising phase".

The Cabinet Office says the coincident index has improved but the government must closely monitor economic developments in the months ahead, such as production.

The office had maintained the view of the index "continuing to seesaw" for the five months through May.

The index of leading indicators, predicting economic developments about six months down the road, came to 60.0 percent, exceeding 50 percent for the first time in five months.

The index of lagging indicators, designed to measure economic performance in the recent past, was at 75.0 percent, topping 50 percent for the 23rd consecutive month.

It was the first time in five months that all three indexes have moved above 50 percent, the Cabinet Office said.

Private-sector economy analysts said the data bolstered expectations that Japan's economy has got itself out of the lull in the April-June quarter and is moving toward a full-fledged recovery.

"Of the coincident index, investment goods shipment, retail sales, small and medium-sized companies' sales and the ratio of job offers to job seekers have stayed in positive territory for three to four straight months," said Yukari Sato, chief economist at Credit Suisse First Boston Securities (Japan) Ltd.

"This indicates manufacturers' activity and consumption have been in good shape," Sato said, adding that the latest data fuel expectations that Japan's gross domestic product for the April- June period, whose preliminary figures will be released next Friday, will show an expansion from the preceding quarter.

The three diffusion indexes compare the levels of various economic data for a reporting month with levels three months earlier.

Source: Xinhua