Japan Offl: Q2 GDP Better On Supply Chain Pickup, TV Demand

Author: Market News International | Category: News

TOKYO (MNI) – Japan’s economic contraction in the April-June
quarter eased to -0.3% from -0.9% in January-March as a recovery in
quake-hit production facilities and supply chains led to an inventory
buildup and a pickup in capital spending, a Cabinet Official said on
Monday.

The Q2 GDP data also showed that the downward pressure on private
consumption was dissipated by a rebound in high demand for durable
goods, namely personal computers and flat-screen TVs, as Japan
completely switched to digital television broadcasting in July, he told
reporters.

But the 0.43 percentage point positive contribution by domestic
demand (private-sector inventories and government spending on temporary
housing in the disaster-hit northern region) was outpaced by the sharp
0.76 percentage point drag from overseas demand, resulting in the 0.33%
GDP drop in Q2.

“Exports were dragged down by combined effects of the appreciation
of the yen, slower overseas economies and domestic supply constraints
(caused by the March 11 earthquake disaster),” said the official.

Exports of automobiles and semiconductors to many regions slumped
in the April-June from the previous quarter, he added.

The 4.9% q/q decline in Q2 exports, compared with no growth in Q1,
is the largest since -25.3% in January-March 2009 at the height of the
global recession triggered by the collapse of Lehman Brothers.

Q2 private consumption fell only 0.1% q/q, much smaller than
forecast by economists and recovering from the 0.6% drop in Q1.

Household spending on durable goods rebounded after a sharp drop in
Q1, thanks to strong demand for PCs and flat-screen TVs, pushing up
consumption by 0.3 percentage point.

Sending on semi-durable goods, which added 0.2 percentage point to
consumption, was supported by purchases of government-recommended casual
summer clothing as office workers are trying to cool off amid heat waves
and the power supply shortage caused by the March disaster.

By contrast, household spending on non-durable goods pushed down
consumption by 0.4 percentage point, partly in payback for rush
purchases of emergency food in Q1, and partly due to lower electricity
usage. Services spending trimmed consumption by 0.1 percentage point as
the disaster swept through northeastern Japan, leaving many homeless and
pushing down imputed rents.

The third consecutive GDP decline was the longest stretch since the
fourth straight drop through Q1 of 2009, government data showed.

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

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