Japan's real gross domestic product expanded by an annualized 0.3 percent from July to September, marking a steep retreat from the prior quarter's 1.4 percent increase. Private consumption posted its first drop in seven quarters after contracting 0.2 percent, heavily impacted by inflation on non-durable goods. This decline combined with negative net external demand to overshadow an expected 1.5 percent rebound in capital expenditure. The final government figures will help the Bank of Japan determine if conditions justify an interest rate hike as early as next month.
Key points
Severe inflationary pressures on non-durable goods and policy factors hitting durables ar…: Severe inflationary pressures on non-durable goods and policy factors hitting durables are stifling household spending.
Persistently sluggish domestic consumption threatens to derail the momentum of Japan's mu…: Persistently sluggish domestic consumption threatens to derail the momentum of Japan's multi-quarter economic expansion.
The imminent third-quarter data will serve as a critical guide for the central bank regar…: The imminent third-quarter data will serve as a critical guide for the central bank regarding upcoming interest rate hikes.
Sources checked by our analysis pipeline: 1
TOKYO, Nov 6 : Japan's economy is expected to have expanded only marginally between July-September, as recoveries in capital spending were largely offset by slowdowns in private consumption and external demand, a Reuters poll showed on Friday.
• Real gross domestic product (GDP) likely grew an annualised 0.3 per cent in the third quarter, according to the median forecast of 16 economists, slowing from a 1.4 per cent expansion in April-June but remaining on track for a fourth straight quarterly increase.
• Without annualisation, the July-September growth rate was estimated at 0.1 per cent.
• Economic growth will be among factors considered by the Bank of Japan in deciding whether to raise interest rates further. Many analysts expect the next BOJ rate hike as soon as next month.
• Capital expenditure was seen growing 1.5 per cent, rebounding from the previous quarter's 0.9 per cent decline. In contrast, private consumption, which accounts for more than half of Japan's GDP, is expected to have declined 0.2 per cent, the first contraction in seven quarters.
• "Service consumption was firm in July-September…
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