Japan Economy Grows 4.9%


Japan’s economy grew less than forecast in the first quarter as an export-led recovery failed to stoke consumer spending, putting pressure on the central bank to do more to end deflation as it begins a two-day meeting.

Gross domestic product rose 4.9 percent in the three months to March at an annualized rate, up from 4.2 percent in October to December, the Cabinet Office said in Tokyo. Unadjusted for price changes, so-called nominal GDP gained 1.2 percent on a quarterly basis, the most in a decade, as trade rebounded.

In the first quarter, companies from Nissan Motor Co. to Tokyo Electron Ltd. reaped the benefits of the trade recovery as they forecast higher profits and spending. The rebound also did start feeding into wages and the labor market. Earnings rose for the first time in 22 months in March and the ratio of job openings to applicants advanced for a third month.

Consumer spending rose 0.3 percent in the first quarter, slowing from the previous period’s 0.7 percent gain, today’s report showed.

Business spending gained 1 percent, less than the fourth quarter’s 1.3 percent. Housing investment climbed 0.3 percent, the first increase in five quarters.

The 4.9 percent annualized growth rate followed a revised 4.2 percent expansion in the previous quarter, today’s report showed.

Price declines in Japan did moderate last quarter, with the domestic demand deflator falling 1.9 percent, the smallest drop in a year, today’s report showed. From the previous three months, it rose for the first time in seven quarters.


TradingEconomics.com, Bloomberg
5/19/2010 11:35:44 PM