Prime Minister Fukuda attended the 54th general meeting of the Quality-of-Life Council held at the Prime Minister's Official Residence on Monday, Nov 05, 2007.

Japan's Cabinet Office announced on Tuesday the the Index of Business Conditions, a broad indicator of the outlook for the economy fell to the lowest level since 1997, signalling that economic growth may stall.

The leading index was zero percent in September, the Cabinet Office said. A reading of under 50 indicates that the economy may slow in three to six months.

The Japanese economy is the second biggest in the world.

Following a decline in industrial production in September and  and fall in summer bonuses, the Bank of Japan cut its forecast for economic growth in its economic outlook last week, in part because of a fall in housing starts caused by a change in building regulations.

The Bank said in its outlook: From the second half of fiscal 2007 through fiscal 2008, the economy is likely to continue its sustained expansion, although there are uncertainties regarding overseas economies and global financial markets.  A virtuous circle of growth in production, income, and spending is expected to remain in place.  The rate of real GDP growth in fiscal 2007 and fiscal 2008 is likely to register around 2 percent on average, somewhat higher than the potential growth rate.  The growth rate will be somewhat lower in fiscal 2007 and somewhat higher in fiscal 2008 due to a swing in housing investment.

The leading index comprises 12 monthly indicators including housing starts, stock prices and other stat that measure forward economic activity. When a component is considered negative, it has to be weaker than it was three months previously.

Housing starts plunged 44% in September to the lowest level in four decades because of stricter rules for issuing building permits. The government has announced that it would relax the regulations.

Last month, Credit Suisse cut its growth estimate to 1.7% for the year ending March 31st, down from the previous forecast of 2.9%, citing a fall in residential investment.

Wages have either fallen or remained static in recent years and domestic car sales have plunged reflecting the adverse conditions faced by the typical Japanese consumer.

Japanese sales of new motor vehicles with engines of over 660cc dropped 10.5 per cent in the first half of 2007 to a 30-year low.

Domestic sales of new motor vehicles with engines of over 660cc dropped 10.5 per cent in the first half of 2007 from a year earlier to a 30-year low of 1,788,440 units, the Japan Automobile Dealers Association said.

The result for the January-June period represents a year-on-year fall for the second consecutive year and is comparable to the 1,742,109 vehicles sold in the first half of 1977.

Sales of cars at Toyota Motor Corp. other than Lexus vehicles decreased 10.9 per cent. Sales at Nissan Motor Co. fell 13.2 per cent while those at Honda Motor Co. were down 5.6 per cent.

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