Exports Drive Japan Economic Growth

123jump.com Staff
13 Nov, 2007
New York City

The economy in Japan advance at 0.6% in the third quarter on rising consumer spending, according to preliminary estimate by the Cabinet Office in Japan. The economy expanded at 2.6% in the third quarter, annualized, and annualized second quarter growth rate was revised downward to 1.6% from 1.2%. Surge in exports of 2.9% in the quarter to Asia and Europe helped the economic growth. The Bank of Japan left the rates unchanged at 0.5%.

[R]6:00AM New York, 7:00PM Tokyo - Tokyo stocks declined for the eighth session in a row. Rising consumer spending lifted third quarter GDP.[/R]

In Tokyo trading Nikkei 225 slumped 0.46% to 70.46 to 15,126.63, while the broad Topix Index shed 1.67 to 1,454.73.

In the first section of the Tokyo Stock Exchange 9.9 billion shares worth 1.2 trillion yen were traded compared to 260 million shares valued at 5.0 billion yen traded in the second section.

Of the Nikkei 225 stocks 84 gained, 134 declined and 7 were unchanged. Casio Computer Company led gainers, rising 13.86% after brokerage Merrill Lynch raised the rating on the stock to “buy” from “neutral”. Mitsubishi UFJ Nicos on Aiful return to profitability.

Japan’s Cabinet Office released its preliminary third quarter GDP estimates that real GDP soared by 0.6% from the previous year to an annualized 2.6% in the three months to September. GDP for the second quarter was revised to 1.6% compared to the preliminary figure of 1.2%. Net exports contributed 0.2% and local demand increased 0.4% from 0% and –4% registered in the first and second quarter respectively.

According to the statistics, private demand rose 0.3% from 0.2% in the April to June period, while the consumption of households also rose to 0.3% from 0.2%. Private residential investment tumbled 7.8% from a 4.1% decline in the second quarter. However, private non-residential investment rose 1.7% from a fall of 2.1% in the previous quarter.

Changes in private inventory contributed 0.1% from a 0.1% slump to GDP recorded in the second quarter. The Cabinet Office also noted that government consumption leapt 0.3% in the quarter under review, while public investment plunged 2.6%, extending a 2.7% drop in the previous quarter.

Exports rose 2.9% from 0.9% in the three months to April and imports similarly climbed 0.5% from 0.8%. The GDP deflator, which is a measure of prices, declined 0.3% and the domestic demand deflator and private consumption deflator fell 0.2% and 0.5 % in that order.

The Bank of Japan today kept its key interest rate on hold at 0.5% by an 8-1 vote after a two-day monetary policy. Again, Atsushi Mizuno was the only dissenter.

Of the Nikkei 225 index shares, Casio Computer Company paced gainers, with a rise of 13.86%, followed by increases in Mitsubishi UFJ Nicos of 12.44%, in Clarion Company Limited 7.93%, in Toto Limited of 7.93% and IHI Corp of 4.44%.

Casio Computer Company, which has a joint venture with Hitachi Limited Casio Hitachi Mobile Communications, gained the most since May 2004 after Merrill Lynch lifted the rating on the stock from “neutral” to “buy”, citing an increase in market share in the handset business that could help profits.

Mitsubishi UFJ Nicos rose after consumer lender Aiful Corp second quarter profit jumped to 14.2 billion yen from a loss of 194 billion yen a year ago. Revenue for the company however slumped 16% to 107 billion yen.

Isuzu Motors led decliners in the index with a fall of 5.86%, followed by losses of 5.56% in Sojitz Corporation, 5.29% in Nippon Mining house, 4.55% in Mitsumi Electric Company and 4.47% in Showa Shell.

Isuzu reported yesterday that first half profit fell 33% as domestic demand slumped. Net income dropped 37 billion-yen in the six months to September.

Commodity and energy related stocks fell on declining prices of metals and oil. Crude oil for December delivery fell 0.3% to $94.36 per barrel. Mitsubishi Corp plunged 3.73 and Nippon Oil declined 2.07%.

Sankyo rose after the first half net income fell to 16.3 billion yen, lower than the 16 billion yen analysts had predicted.