Japan Q2 Output Gap -3.7%, Little Changed From Q1’s -3.8%

TOKYO (MNI) – Japan’s output gap — excess capacity vs. slack
demand — stood at -3.7%, or around Y20 trillion, in the April-June
quarter, little changed from -3.8% seen in both January-March this year
and the final quarter of 2010, the Cabinet Office said on Monday.

The negative output gap widens when gross domestic product growth
falls below the economy’s potential growth rate.

Real GDP shrank by an annualized 1.3% in Q2, improving from -3.6%
in Q1.

The output gap is believed to influence prices with a lag of six to
12 months.

Japan’s output gap has been improving gradually after hitting a
bottom of a revised -8.7% in January-March 2009.

Core CPI, which excludes perishables, rose 0.1% from a year earlier
in July, posting the first y/y gain in 31 months under the new data
formula. It marked a record 2.4% y/y drop in August 2009.

The government has updated the CPI base year to 2010 from 2005 and
reviewed the basket of goods and services used for calculating the main
consumer price measure.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

[TOPICS: M$J$$$,M$A$$$,MAJDS$]