Growth of Japan’s 3Q GDP revised up to 2.5% in capital expenditures


Japan's economy expanded in the third quarter more than was initially reported, as the recovery in exports led to greater commercial investment and an increase in inventories. Private consumption fell, underscoring the gap between external demand and consumer spending.

Highlights of the GDP report
  • Gross domestic product expanded by 2.5 percent per year (estimated +1.5 percent) in the third quarter. That compares with a preliminary reading of 1.4 percent.
  • Business spending increased 1.1 percent (estimated +0.4 percent) with respect to the previous quarter. The preliminary reading was +0.2 percent.
  • Private consumption decreased 0.5 percent. The preliminary reading was -0.5 percent.
  • Net exports, or shipments minus imports, contributed 0.5 percentage points to growth. This did not change from the preliminary reading.

Key Takeaways

The Japanese economy has grown for seven consecutive quarters, its longest expansion since comparable data in the mid-1990s, showed previous data revisions. A recovery of almost one year in exports is boosting corporate profits and business investment. A series of key indicators from October suggest that while growth may slow somewhat, GDP growth will continue in the fourth quarter, even if consumer spending remains mediocre. Household spending on durable goods and services fell during the third quarter of the April-June period.

Economist Views

  • "Solid investment shows that Japan's economy is taking a step towards self-sustaining recovery," Hidenobu Tokuda, a senior economist at the Mizuho Research Institute. "The record earnings of companies and the demand for IT-related goods and labor-saving investments are helping to drive fixed commercial investment."
  • "Consumer spending is not as strong due to the timid growth of wages in general, "said Tokuda." There is a risk that the recent increase in oil prices could reduce the purchasing power of households. "
  • " In private consumption, this time there was bad weather in the summer, so that is probably weaker than it really is, "said Masaki Kuwahara, senior economist at Nomura Securities." I do not think this situation will continue, but generally the engine behind the economic expansion is exports, with the addition of capital expenditure. national ".

Bloomberg Economics

The revised growth figure will incorporate a new method to calculate private consumption, which will probably push the road up or historical consumer spending, suggesting that the economy is stronger than previously thought, wrote Yuki Masujima of Bloomberg Economics before the release of the data. sales data and less to household surveys, and the result could increase the debate over whether the Japanese economy has finally emerged from its deflationary depression, Masujima wrote.

Other details

  • Measured quarter after quarter, GDP expanded 0.6 percent (preliminary reading was +0.3 percent).
  • The GDP deflator, a broad measure of price changes, rose 0.1 percent from the previous year (the preliminary reading was +0.1 percent). [19659004] A separate data publication showed that Japan's current account surplus was 2.18 trillion yen in October.

– With the help of Toru Fujioka and Yuko Takeo

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