Japan Q3 GDP falls faster than initial estimates; household spending also down
2023.12.07 20:31
© Reuters. A man walks past a sign of Bank of Japan outside its headquarters in Tokyo, Japan, October 31, 2023. REUTERS/Kim Kyung-Hoon/File Photo
By Satoshi Sugiyama
TOKYO (Reuters) – Japan’s economy fell faster than initially estimated in the third quarter, revised data showed on Friday, complicating the central bank’s efforts to phase out its accommodative monetary policy.
Consumer and business spending both shrank, driving down third-quarter gross domestic product (GDP). Separate data showed real wages and household spending kept falling in October, as prolonged inflation discouraged shoppers.
“Weakness in personal consumption is likely to 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, an economist at Daiwa Securities.
The economy lost an annualised 2.9% in July-September, the revised Cabinet Office data showed, more than a previously estimated 2.1% contraction and market forecasts for a revised 2.0% decline.
Capital expenditure fell 0.4%, which compared with a preliminary 0.6% decease and a median market forecast for a 0.5% fall.
Private consumption, which makes up more than half of the economy, fell 0.2% in July-September, versus a mostly flat change in the initial estimate.
External demand shaved 0.1 percentage point off real GDP, compared with the preliminary reading of 0.1 point, as service imports outgrew auto exports.
Separate data showed inflation-adjusted real wages dropped 2.3% year-on-year in October to mark a 19th straight month of decline, although slower than the 2.9% fall in September, according to the labour ministry.
Although nominal salaries rose 1.5%, inflation of more than 3% wiped off the wage growth in real terms, a gauge of consumers’ purchasing power. With income stagnant, household spending decreased 2.5% in October from a year earlier, falling for eight months in a row, an internal affairs ministry data showed.
The Bank of Japan has stressed it needs to maintain ultra-low interest rates until sustainable inflation of 2% along with wage hikes comes into view. Next year’s wage outlook would be crucial for determining whether prices were on the right track, governor Kazuo Ueda said on Thursday.
(This story has been refiled to add a dropped word in the headline)
