Japan's GDP revised down slightly; capex weak

Japan's economy rebounded in the third quarter at a slightly slower pace than initially estimated as companies pulled back on capital spending, worried that yen strength and slowing global growth will hurt exports. Gross domestic product (GDP) grew a revised 1.4 percent in July-September from the previous quarter, slightly slower than a preliminary 1.5 percent increase but above a median forecast of a revised 1.3 percent expansion.
While the data does not change the bigger picture of the world's third largest economy emerging from a March earthquake-triggered recession thanks to a steady mending of supply chains, analysts say a slowdown is inevitable as growth in many overseas economies stutters.
"It was still a substantial quarterly rebound and many are foreseeing growth to come, especially from domestic demand, and that's probably possible for 2012," said Naomi Fink, head of Japan strategy at Jefferies Japan. On an annualised basis, the economy expanded 5.6 percent, less than a preliminary 6.0 percent gain but more than a 5.2 percent increase expected by analysts.
Capital spending fell a revised 0.4 percent, against a preliminary reading of a 1.1 percent increase and economists' forecast for a 0.1 percent decline. The decline had been signalled by a separate government survey last week. A deepening euro zone debt crisis, persistent yen strength and sputtering global growth are bringing more pain to the Japanese economy with exports, machinery orders and business sentiment slumping.
A business sentiment survey on Friday also showed big Japanese manufacturers turned pessimistic for the first time in two quarters about business conditions in the three months to December compared with the previous quarter. But he repeated the central bank's forecast for a return to moderate recovery afterwards thanks to the strength of emerging economies and reconstruction demand in Japan. The BoJ loosened monetary policy in October to ease the pain on the economy, and has expressed its readiness to offer additional stimulus if its scenario of a moderate recovery is threatened. The board next meets for a policy review on December 20-21.