— Japan Q4 Annualized Real GDP Revised To -1.3% From Prelim -1.1%
— Japan Q4 Real GDP Unrevised -0.3% Q/Q
— Japan Q4 Capex Rise Revised Down To +0.5% Q/Q From +0.9%
— Japan Q4 Domestic Demand Contribution Unrevised -0.2 Pt
— Japan Q4 Net Export Contribution Also Unrevised -0.1 Pt
— Japan Q4 Private Consumption Revised Down To -0.8% From -0.7%
— Japan Q4 Revised Private Inventory Contribution +0.3 Vs +0.2 Pt

TOKYO (MNI) – Japan’s economy contracted at a real annualized pace
of 1.3% in October-December from the previous quarter, revised down from
a preliminary 1.1% fall, in light of a bigger decline in consumer
spending and weaker growth in business investment than initially
estimated, the Cabinet Office said Thursday.

On a quarter-on-quarter comparison, GDP fell 0.3%, unrevised from
the preliminary reading.

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 first contraction in five quarters.

The annualized figure came in weaker than the -1.2% median forecast
of economists surveyed by Market News International.

Economists had expected the second preliminary GDP figure to be
revised down slightly from the initial estimate following the outcome of
the latest quarterly survey by the Ministry of Finance released on
March 3.

The survey showed that combined capital investment by Japanese
non-financial companies rose 3.8% in the fourth quarter of 2010 from a
year earlier, the second straight quarter of gains.

On a seasonally adjusted, quarter-over-quarter basis, capex
excluding spending on software rose 0.7% in October-December, after a
downwardly revised 1.3% rise in Q3, the MOF survey showed.

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.

But the downward revision to the annualized GDP contraction came
largely from consumer spending.

Private consumption fell a revised 0.8% in the fourth quarter from
the previous quarter, compared to the preliminary reading of -0.7%.

Private consumption, which accounts for nearly 55% of the world’s
third-largest economy, pushed down Q4 GDP by 0.5 percentage point, which
was larger than the negative contribution by 0.4 percentage point seen
in the preliminary report.

Demand for automobiles tumbled in the October-December quarter,
after the government ended its subsidy program for buying low-emission
vehicles in September.

Spending on non-durable goods also fell during the last quarter
following unusually high demand for cigarettes before the tobacco tax
hike that took effect Oct. 1.

The latest estimates for private non-residential investment, or
capex, was revised down to a 0.5% quarter-on-quarter rise from the
0.9% gain initially reported, but its contribution to GDP was unchanged
at +0.1 percentage point.

A larger-than-expected rise in private-sector inventories and
higher government consumption offset the downward revision to consumer
spending on a quarter-on-quarter basis.

Domestic demand made a negative contribution of 0.2 percentage
point to the fourth quarter GDP while net exports (exports minus
imports) pushed down GDP by 0.1 percentage point, both unchanged from
the initial estimates.

Government consumption rose 0.3% q/q, revised up from a preliminary
+0.2% and it made a positive contribution of 0.1 percentage point,
instead of the neutral reading in the initial report.

The key points of the latest GDP data:

– Exports fell by a revised 0.8% q/q in Q4 from an initial -0.7%
(vs. +1.5% in Q3)

– Imports fell 0.1% q/q in Q4, unrevised from the preliminary
figure (vs. +2.9% in Q3).

– Private consumption fell 0.8% q/q in Q4, revised down from a
preliminary -0.7% (vs. +0.9% in Q3), and its negative contribution to Q4
GDP was -0.5 percentage point, revised down from -0.4 point.

– Private capital expenditures rose by a revised +0.5% q/q, revised
down from a preliminary +0.9% in Q4 (vs. revised +1.4% in Q3). Its
contribution was +0.1 percentage point, unrevised from the initial
report.

– In nominal terms, the economy fell 0.7 (vs. a preliminary -0.6%)
in the October-December quarter of 2010, and contracted by 2.8% at an
annualized pace (vs. a preliminary -2.5%).

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

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