Japan’s economy grew faster than first thought in the final three months of 2016.
According to Japan’s Cabinet Office, real GDP grew by 0.3% in the December quarter, higher than the 0.2% preliminary reading issued in February.
Despite the upgrade, it fell short of the 0.4% figure that had been eyed by markets.
Given the small upward revision to the quarterly figure, the seasonally-adjusted annual rate (SAAR) also ticked up to 1.2% from 1.0%, although that too was below the 1.6% level expected.
The Cabinet Office said that private business investment grew by 2% for the quarter, up from the initial estimate of 0.9%, contributing 0.3 percentage points to GDP.
The quarterly increase was the fastest since the March quarter 2014, and will please the government given it is relying upon capital expenditure to underpin economic growth and improve productivity levels.
It also corresponded with recent strength in alternate manufacturing surveys, such as the Nikkei-IHS Markit PMI.
“Corporate sentiment among manufacturers has been improving, and we are finally starting to see this reflected in capital expenditure,” Hiroshi Miyazaki, senior economist at Mitsubishi UFJ Morgan Stanley Securities, told Reuters prior to the release of the GDP data.
“I expect more capital expenditure to come through, and I think the economy is headed in the right direction.”
Outside of business investment, however, the news was a little less impressive.
Private consumption — the largest component within GDP — made no contribution to growth while a decline in business inventories sliced 0.2 percentage points from GDP, seeing domestic demand contribute just 0.1 percentage point to the quarterly figure.
The final 0.2 percentage points to the quarterly GDP figure came from trade as growth in export volumes outpaced those in imports.
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