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TOKYO (MNI) – Japan’s economy expanded by a real 1.4% on quarter in
July-September, revised down from a preliminary 1.5% rise in light of
weaker capital investment and private consumption than initially
estimated, the Cabinet Office said Friday.

Gross domestic product marked the first quarter-on-quarter gain in
four quarters after -0.5% in Q2, -1.7% in Q1 and no growth in Q4 of
2010.

At an annualized pace, GDP rose 5.6% — revised down from a
preliminary 6.0% rise — for the first growth in three quarters, instead
of four quarters as reported in the preliminary data last month.

In the latest estimate, GDP for the final quarter of 2010 was
revised up to an annualized 0.1% rise from a contraction of 2.7%.

The revision compares with the median forecast for +1.3%
(annualized +5.1%) in a Market News International survey of economists.

The latest estimates for private non-residential investment, or
capex, was revised down to a 0.4% quarter-on-quarter fall from the 1.1%
rise initially reported.

Business investment pushed down Q3 GDP by 0.1 percentage point,
instead of pushing it up by 0.1 percentage point as reported last month.

Private consumption was revised down to +0.7% on quarter from +1.0%
and its positive contribution to Q3 GDP was revised down to +0.4
percentage point from +0.6 point.

Meanwhile, private-sector inventories, another major factor in
calculating revisions to GDP, pushed up Q3 GDP by 0.3 percentage point,
an upward revision from the initial reading of +0.2 point.

Economists expected Q3 GDP to be revised down from the initial
estimate, based on the latest business survey by the Ministry of Finance
released on Dec. 2.

The quarterly survey showed that combined capital investment by
Japanese non-financial companies fell 9.8% in the third quarter of 2011
from a year earlier, marking the second consecutive year-on-year fall
after -7.8% in the second quarter.

On a seasonally adjusted, quarter-over-quarter basis, capex
excluding spending on software fell 2.7% in the September quarter,
marking the fourth straight quarterly drop after a revised fall of 6.3%
in the previous quarter.

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.

From a year earlier, Q3 GDP fell 0.7% (initially unchanged with a
slight negative bias), marking the third consecutive y/y drop, after
falling 1.7% in Q2.

The contribution of domestic demand to the third quarter GDP was
revised down to +0.8 percentage point from the +1.0 percentage point
originally reported.

Net exports (exports minus imports) provided positive contribution
to Q3 GDP of +0.6 percentage point, revised up from +0.4 percentage
point.

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

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