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Japan GDP seen revised up on boost from capital expenditure - Reuters poll

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By Reuters
Japan GDP seen revised up on boost from capital expenditure - Reuters poll
Men work at a construction site in Tokyo, Japan May 16, 2018. REUTERS/Issei Kato   -   Copyright  Issei Kato(Reuters)

TOKYO (Reuters) – Japan’s economic growth in the second quarter is expected to be revised up due to an acceleration in capital expenditure, a Reuters poll showed on Friday, suggesting the economy remains on a firm footing.

The world’s third-largest economy is forecast to have grown an annualised 2.6 percent in April-June, up from the preliminary 1.9 percent announced last month, the poll of 18 economists showed.

“I expect an upgrade, which will reflect the fact that capital expenditure is doing extremely well,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

Japanese companies have been steadily increasing business investment to cope with labour shortages stemming from a shrinking population.

Many companies are purchasing new equipment and software that allow them to run factories and provide services with fewer workers, and this spending is making a positive contribution to gross domestic product.

The Cabinet Office will publish GDP data <JPGDAR=ECI> at 8:50 a.m. on Monday, Sept. 10 Japan time (2350 GMT on Sept. 9)

Machinery orders <JPMORD=ECI>, considered a leading indicator of capital expenditure, are forecast to have risen 5.7 percent in July from the previous month.

That would be a rebound from an 8.8 percent decline in June and offer further evidence that capital expenditure is gaining strength.

The Cabinet Office will publish machinery orders data at 8:50 a.m. on Thursday Sept. 13 Japan time (2350 GMT on Sept. 12)

Japan’s household spending rebounded modestly in July as higher bonus payments pushed up real wages, data last week showed, in a sign that consumer spending might pick up.

However, economists worry that trade frictions could undermine Japan’s export-oriented economy.

(Reporting by Stanley White; Editing by Richard Borsuk)