August 4, 2017 / 7:02 AM / 7 months ago

Japan's GDP seen expanding for sixth straight quarter on domestic demand

TOKYO (Reuters) - Japan’s economy was expected to grow for a sixth straight quarter in April-June, a Reuters poll found on Friday, buoyed by domestic demand as consumer spending recovered and firms increased their capital investment.

FILE PHOTO: A cargo ship is pictured at an industrial port in Tokyo, Japan, August 18, 2016. REUTERS/Kim Kyung-Hoon/File Photo

Gross domestic product (GDP) was seen expanding at an annualized rate of 2.5 percent in the second quarter, the poll of 20 analysts found, a rate last posted in January-March 2016, while the last six straight quarter run of growth was January-March 2005 through April-June 2006.

The anticipated 2.5 percent expansion would translate to 0.6 percent on quarter-on-quarter growth after a revised 0.3 percent rise in the first quarter this year.

“The economy for this fiscal year will likely continue recovering, helped by the global economic recovery,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute.

“Consumer sentiment is improving on higher share prices and durable goods purchases are picking up, which likely contributed positively to consumer spending.”

Private consumption, which accounts for roughly 60 percent of GDP, likely grew 0.5 percent in the second quarter, after a 0.3 percent gain in the January-March period.

External demand - or exports minus imports - was thought likely to shave 0.3 percentage point off growth, the poll found, which would be the first deduction for negative net exports in four quarters.

But analysts say the trend of exports remains upward on overseas demand while gains in imports reflected strong domestic demand.

The poll found capital spending was to expected to show a rise of 1.2 percent in the second quarter after increasing 0.6 percent the previous quarter.

The Cabinet Office will announce the GDP data on August 14 at 8:50 a.m.(2350 GMT, August 13).

Japan will publish core machinery orders next week, which are seen likely to show a 3.7 percent increase in June from May when they dropped 3.6 percent, and up for the first time in three months. An outcome of 3.7 percent would mark the fastest rate of growth since July 2016.

The core orders, which exclude ships and equipment for power generators, are a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months.

June was seen down 1.0 percent in from a year earlier following a 0.6 percent rise in May.

“Machinery orders from the manufacturing sector have improved recently...The focus is whether orders from the non-manufacturing sector for labor-saving equipment will rise,” an analyst at SMBC Nikko Securities said in the survey.

The Cabinet Office will issue the machinery orders report on August 10.

Japan’s current account balance, due out on Tuesday, is expected to show a surplus of 814 billion yen ($7.40 billion) in June from 1.65 trillion yen in May, the poll showed.

Reporting by Kaori Kaneko; Editing by Eric Meijer

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