— Japan Q2 Real GDP Revised To -0.5% Q/Q From -0.3%
— Japan Q2 Annualized Real GDP Revised To -2.1% From -1.3%
— Japan Q2 GDP MNI Poll Median Forecast: -0.5% Q/Q, -2.2% Annualized
— Japan Q2 Capex Revised To -0.9% Q/Q From +0.2%
— Japan Q2 Domestic Demand Contribution Revised +0.2 Pt Vs Prelim +0.4
— Japan Q2 Net Export Contribution Unrevised -0.8 Pt
— Japan Q2 Private Consumption Revised -0.0% Vs Prelim -0.1%
— Japan Q2 Private Inventory Contribution Revised +0.1 Pt Vs +0.3 Pt
— Japan Q2 Public Demand Contribution Revised +0.3 Pt Vs +0.2 Pt

TOKYO (MNI) – Japan’s economy contracted at a faster-than-expected
pace in the April-June quarter, as expected, hit by a downward revision
in business investment and inventory change, data from the Cabinet
Office showed on Friday.

Japan’s real gross domestic product fell 0.5% in the June quarter
from the previous quarter, compared with the preliminary reading of
-0.3%.

At an annualized rate, GDP contracted 2.1% in the second quarter of
2011, compared with the preliminary showing of -1.3%.

The revised GDP was largely in line with the median forecast in a
Market News International survey, which called for -0.5% q/q, or an
annualized rate of -2.2%

The latest GDP figure is far below the economy’s potential annual
growth rate, estimated by the Bank of Japan to be about +0.5%, and is
the third straight quarter of a contraction after -0.9% q/q (-3.7%
annualized) in Q1.

Economists had expected the second preliminary GDP reading to be
revised down from the initial estimate following the outcome of the
latest quarterly survey by the Ministry of Finance released on Sept 2.

The MOF survey showed non-financial firm’s capex including software
fell 7.8% in the three months to June 30 from a year earlier, the first
drop in four quarters and the largest drop since -11.5% in Q1 2010.

The Cabinet Office uses this key piece of demand-side data to
calculate revisions to first preliminary GDP, which is based only on
supply side capex information.

Non-residential investment, or corporate capital spending, fell
0.9% in the second quarter, compared with the preliminary showing of
+0.2%. This sector made a negative contribution of 0.1 percentage point,
rather than the preliminary estimate of zero contribution.

The downward revision in capex was smaller than expected by many
economists, with their median forecast in the MNI survey at -1.9% q/q.

Meantime, private-sector inventory change made a positive
contribution of only 0.1 percentage point in the June quarter,
unexpectedly revised down from the preliminary estimate of +0.3
percentage point.

Economists on average expected the Q2 inventory buildup to be
unrevised, based on the continued recovery in quake-hit production
facilities and supply chains.

Private consumption fell by 0.02% in the second quarter from the
previous quarter, revised up slightly from the preliminary reading of
-0.1%.

Private consumption, which accounts for nearly 55% of the world’s
third-largest economy, made a very slight negative contribution to Q2
GDP, unrevised from the initial reading.

These declines were partly offset by the contribution from public
demand, which was revised up to +0.3 percentage point from a
preliminary +0.2 point.

Domestic demand added only 0.2 percentage point to second-quarter
GDP, revised down from initial reading of +0.4 point, while net exports
(exports minus imports) pushed down GDP by 0.8 percentage point,
unrevised from the preliminary figure.

In nominal terms, the economy fell 1.5% (vs. a preliminary -1.4%)
in the June quarter, and contracted by 6.0% at an annualized pace (vs. a
preliminary -5.7%).

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4835 **

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