Japan's Second Quarter GDP Rebounds as Private Consumption Rises

Akira Ito
15 Aug, 2024
Tokyo

Japan market indexes extended gains for the fourth session in a row after economic growth rebounded in the second quarter. 

The Nikkei 225 Stock Average and the Topix index advanced 0.8% after the faster-than-expected increase in GDP growth in the second quarter bolstered market sentiment. 

GDP in the second quarter expanded by 0.8% on a quarterly basis, reversing the 0.6% decline in the first quarter, the Cabinet Office reported Thursday. 

The second quarter data is preliminary, and the estimate is likely to be revised in the coming months. 

On an annualized basis, economic growth rebounded to an increase of 3.1% in the second quarter from the decline in the first quarter of 2.3%. 

The first quarter annualized growth rate was revised from a decrease of 2.9%. 

Private consumption, which includes consumer spending, increased 1.0% from the previous quarter and expanded for the first time in five quarters. 

Durable goods purchases, including appliances and automobiles, soared 8.1%, and the purchase of non-durable goods, which includes food and beverage items, edged up 0.8%. 

However, service spending was unchanged in the quarter. 

The faster rise in imports was a drag on the economy, after exports rose 1.4% and imports advanced 1.7%. 

Government spending inched slightly higher by 0.1%, and public investment expanded by 4.5%. 

Japan has struggled to regain its economic growth momentum since the collapse of the asset bubble nearly three decades ago, and the economy continues to bounce between periods of decline and short spurts of growth. 

The yen held firm at 147.23 against the U.S. dollar after the release of the GDP data. 

 

Japan Movers 

The Nikkei 225 stock average increased 0.8% to 36,721.55, and the Topix index advanced 0.8% to 2,602.50. 

Tech companies advanced following the softer increase in consumer price inflation data in the U.S. 

Advantest, Tokyo Electron, Socionext, Lasertec, and Screen Holdings increased between 1% and 5%. 

Financial stocks also participated in the market advance in the hopes that the faster GDP increase may provide additional support to policymakers looking to increase interest rates. 

Sumitomo Mitsui Financial, Mitsubishi UFJ, and Mizuho Financial gained between 0.5% and 1.4%. 

Kawasaki Heavy Industries soared 7.3% to ¥4,845.0 after the company reported a record June quarter profit amid rising demand and reiterated its annual outlook. 

Dentsu Group soared 10.3% to ¥4,266.0 despite the advertising agency lowering its annual outlook. 

The company lowered its annual earnings outlook and now expects net income of 36.7 billion yen compared to the previous estimate of 61.7 billion yen. 

However, the company retained its annual sales outlook at 1.36 trillion yen. 

Net sales for the second quarter increased 17% to 348.03 billion yen, and net income plunged to 10 million yen from 3.44 billion in the quarter a year ago.