TOKYO – Japan’s economy shrank faster than initially estimated in the third quarter, revised data showed on Dec. 8, complicating the central bank’s efforts to phase out its accommodative monetary policy.
Both consumer and business spending declined, reducing third-quarter gross domestic product (GDP). Separate data showed real wages and household spending continued to ease in October as a lingering inflationary boost encouraged shoppers.
„Weak private consumption will continue for the foreseeable future as real disposable income is likely to extend its decline, which is seen as a factor in sluggish consumption,” said Kota Suzuki, economist at Daiwa Securities.
The economy shrank an annualized 2.9 percent in July-September from the previous quarter, revised Cabinet Office data showed, beating market forecasts for a previously estimated 2.1 percent contraction and a revised 2 percent decline.
Capital spending fell 0.4 percent, compared with a preliminary 0.6 percent decline and the average market forecast for a 0.5 percent decline.
Private consumption, which accounts for more than half of the economy, shrank 0.2 percent in July-September, a largely flat change from initial estimates.
External demand edged real GDP by 0.1 percentage point, compared to an initial reading of 0.1 point, as service imports outpaced auto exports.
Inflation-adjusted real wages fell 2.3 percent year-over-year in October, marking the 19th monthly decline, according to the Labor Department, though slower than the 2.9 percent drop in September.
Although nominal wages rose 1.5 percent, inflation of more than 3 percent eroded wage growth in real terms, a measure of consumers’ purchasing power. Household spending fell 2.5 percent in October as income stagnated.
The Bank of Japan has insisted on maintaining ultra-low interest rates until inflation stabilizes at 2 percent along with wage increases. Governor Kazuo Ude said on December 7 that next year’s wage outlook will be important to determine whether prices are on the right track. Reuters
„Oddany rozwiązywacz problemów. Przyjazny hipsterom praktykant bekonu. Miłośnik kawy. Nieuleczalny introwertyk. Student.