Last year, Japan's Economic Planning Agency incorrectly dated the end of the latest recession to June, 1993. So it was more cautious the second time, waiting until Nov. 17 to declare that Japan's second-longest recession in the postwar era ended back in October, 1993.

The latest data back up the declaration. The leading index stood at 54.5 in September, down from August's 100, but still high enough to signal growth. Manufacturing is improving, helped by some inventory rebuilding and increased exports. Factory output and machinery orders are growing (chart).

Exports and capital spending won't do it all in this upturn. In its monthly economic report on Nov. 22, the Bank of Japan cited the need for increased consumer outlays to keep the recovery on track.

So far, a tax cut in the form of a rebate has boosted shopping. In September, real household spending increased 2% from a year ago. Demand for beer, air conditioners, and clothing surged during this year's unusually hot summer, lifting third-quarter spending 0.5% above its year-ago level. Outlays should continue to rise into 1995, helped by winter bonuses and the second part of the tax rebate. Sluggish job growth, however, will keep consumers from any buying sprees.

Shoppers may be getting more bang for every yen spent, though. That's because the government doesn't include discount stores when tallying inflation. So consumer prices, which were up 0.2% nationally in the year ended in September, may really be falling.

The monthly data suggest that growth in Japan's third-quarter gross domestic product, which is to be released in mid-December, could be strong. Real GDP fell at a 1.6% annual rate in the second quarter.

The Japanese government is taking no chances, however. Tokyo recently increased the number of homebuyers who are eligible for mortgage subsidies to a record 1 million. That should keep homebuilding on solid ground and prevent the Japanese economy from floundering again.

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