Friday, 14 December, 2018

Japan fourth quarter GDP rises 0.5 percent on consumer spending

Japan fourth quarter GDP rises 0.5 percent on consumer spending Japan fourth quarter GDP rises 0.5 percent on consumer spending
Nellie Chapman | 16 February, 2018, 05:12

The preliminary reading for fourth-quarter gross domestic product compared with a median estimate of a 0.9 percent annualized increase in a Reuters poll of economists.

This is the longest consecutive period of economic expansion in roughly 28 years, according to the Cabinet Office.

Japan's economy has cruised along at well above its potential growth rate, fuelling growing confidence that an ever-tighter labour market and record corporate profits would generate stronger consumer spending and inflation.

Japan is still growing - enjoying its longest streak of GDP growth for almost three decades, even though the three months ending December saw a sharp slowdown from the hectic pace in the September quarter.

The latest growth was led by domestic demand.

Private consumption added 0.5% on quarter, exceeding expectations for a gain of 0.4% following the 0.6% decline in the previous three months.

Quarter on quarter growth slowed to an annual rate of 0.5% in the December three months, down sharply from the revised 2.2% pace in the September quarter (2.5% originally in the December announcement).

The GDP deflator also was unchanged on year, matching forecasts following the 0.2% gain in the second quarter.

A rebound in demand thanks to stronger growth in China, the US and other major economies has helped Japan's export manufacturers, helping to keep the jobless rate below 3 percent.

Following the release of the GDP data, Chief Cabinet Secretary Yoshihide Suga said in a news conference that the fundamentals of the Japanese economy "are clearly becoming firm".

Quarter-on-quarter GDP rose just 0.1%, slowing from a 0.3% in the quarter ended September.

Slower growth ahead, particularly with a stronger yen, weakens inflationary pressure and underscores the likelihood of continued stimulus from the central bank. If housing demand has peaked, declining property prices would decrease the "asset effect" - the psychological lift that prompts consumers to spend more as their asset values rise. He said a virtuous economic cycle is being created.