Japan economic growth slows in April-June

Aug 13, 2007 - Japan's economy grew 0.1 percent in April-June, government data showed on Monday, slightly short of market expectations for a 0.2 percent increase.

It was the 10th straight quarter of expansion and translated into an annualised increase of 0.5 percent, against a median market forecast for a 0.9 percent increase.

In January-March, the economy grew 0.8 percent, for a revised annualised rise of 3.2 percent.

Following are some key points on the preliminary data, based on a briefing by a Cabinet Office official and comments by Economics Minister Hiroko Ota at a briefing later:

- Slower growth in the second quarter was mainly due to a slower rise in consumption and a flat reading for external demand, caused by slower exports to the United States.

- Private consumption, which accounts for some 55 percent of GDP, rose 0.4 percent in real terms in the quarter, thanks to rises in clothing, electricity charges and household appliances such as air conditioners, following a 0.8 percent rise in January-March.

- Slower consumption growth compared with the previous quarter was due to tame growth in incomes. Consumption of jewellery and sports and recreation services also fell, the official said.

- Corporate capital spending, a main engine of growth, rose 1.2 percent, marking the sixth consecutive quarter of increase, helped by investment in plant engineering, software and electrical appliances such as car navigator systems.

- The GDP deflator fell 0.3 percent from the same quarter a year earlier but the domestic demand deflator rose 0.2 percent.

- The government made a minor revision in the way it compiles preliminary gross domestic product from the April-June data. That included a change in the calculation method for inventory contributions to GDP which pushed down the overall GDP figure by 0.1 percentage point.