/www.bloomberg.com/ By Kanako Chiba
Tokyo, Nov. 6 (Bloomberg) -- Japan's index of leading economic indicators rose above the level that suggests the world's No. 2 economy will expand, amid optimism over improving job prospects.
The index, which measures job offers, consumer confidence, and other indicators of economic performance in about six months, rose to 60 percent in September from a revised 45.5 percent in August. A reading above 50 signals an expansion. In August, the index fell below 50 percent for the first time in eight months.
Japanese workers were more optimistic about their job prospects in September, when the number of openings for every 100 applicants rose to 55 from 54. Their optimism may fade as a slowdown in the U.S. undermines Japanese exports and production, economists said.
``The outlook will go downward from now on,'' said Shuji Shirota, a senior economist at Dresdner Kleinwort Wasserstein in Tokyo. ``Manufacturing, stock prices, consumer confidence, and pretty much everything is worsening.''
Exports accounted for half of Japan's 0.6 percent second- quarter growth, the first in more than a year. Overseas shipments fell for the fourth month in September, threatening to cut short Japan's recovery from its third recession in a decade.
Overseas shipments may fall more as customers in the U.S., Japan's biggest market, cut back.
U.S. growth will slow to a 2.2 percent annual rate this quarter from an expected 3.6 percent pace in the third quarter as consumer spending cools, according to a consensus estimate of economists surveyed by Blue Chip Economic Indicators.
That's prompting Japanese manufacturers to curb investment in factories and equipment. Advantest Corp., the world's biggest maker of memory-chip testing equipment, said it planned to cut 600 jobs after announcing a loss in the six months to Sept. 30. Equipment sales will probably fall in the fiscal second-half, the company said.
``Japan is set to go into another round of economic recession soon,'' said Yasukazu Shimizu, a senior economist at Aozora Bank Ltd. ``Japan's economy will probably start declining at the beginning of next year.''
The coincident index, which tracks factory production, power use by large manufacturers and department store sales to measure current economic performance, rose to 88.9 percent in September from 80 percent in August, today's Economic and Social Research Institute report showed.
The lagging index fell to 40 percent from 50 percent in August.