Japan third quarter GDP slows

Friday, 15 November 2013 00:00 - - {{hitsCtrl.values.hits}}

REUTERS: Japan’s economy slowed less than expected in July-September and is expected to pick up pace in the current quarter as consumers spend now to beat a tax rise next year, but business investment came in sharply below market forecasts. The 0.5% expansion in July-September compares with the median estimate for a 0.4% increase and followed 0.9% growth in April-June, data showed on Thursday.

It was a fourth successive quarter of growth, the best run for the world’s third-largest economy in three years. A tighter labour market and signs of rising wages should bolster consumer spending in coming quarters, economists said. Retail sales are likely to pick up before a sales tax rise in April and stimulus spending should help growth, which bodes well for Prime Minister Shinzo Abe’s push to foster self-sustaining growth and end 15 years of mild deflation. However, capital expenditure growth slowed to 0.2% in July-September, well below a median estimate of 0.8% and suggesting companies remain reluctant to deliver the increased investment needed to secure a sustained recovery. Private consumption, which makes up about 60% of the economy, grew 0.1% in July-September, matching the median estimate and following a revised 0.6% growth in April-June as falls in Japanese shares weighed on consumer sentiment.