Japan's third-quarter recession seen milder than feared as capex grows
By Stanley White
TOKYO (Reuters) - Japan's fall into recession between July-September could turn out to be less severe than feared, with new capital expenditure figures out on Monday suggesting revisions will put the third quarter in a slightly more positive light.
The 5.5 percent year-on-year rise in capital expenditure over the third quarter reported on Monday followed a 3.0 percent annual increase in April-June, which could ease concerns about recovery from a sales tax increase earlier this year.
"The revised data will show a smaller contraction in GDP that could be close to zero," said Hiroaki Muto, senior economist at Sumitomo Mitsui Asset Management Co.
"Other data on consumer spending, factory output and business investment show these three factors will drive future growth."
Japan's economy still contracted in the third quarter, following a decline in the second quarter and confirming a recession. But rising business investment means the contraction was not as severe as initially estimated.
Compared with the previous quarter, capital spending excluding software rose a seasonally adjusted 3.1 percent, versus a 1.5 percent decline in April-June in an encouraging sign of vigorous business investment.
Preliminary data showed the economy contracted an annualized 1.6 percent in July-September, confirming Japan had entered its third recession in the past four years as a sales tax hike in April hurt consumer spending and business investment.
Revised gross domestic product data is due on Dec. 8. The finance ministry data released on Monday is used to re-calculate the capital expenditure component of GDP. Continued...