Japan's GDP Probably Shrank at 0.6% Pace in 4th Qtr (Update1)
Japan's GDP Probably Shrank at 0.6% Pace in 4th Qtr
March 11 (Bloomberg) -- Japan's economy probably contracted more than the government initially estimated in the fourth quarter because companies curbed investment in plants and machinery, economists said.
Gross domestic product probably shrank at an annual 0.6 percent pace, compared with an initial estimate of a 0.5 percent drop, according to the median forecast of 10 economists in a Bloomberg News survey. The Cabinet Office is to release the revised report on March 14 at 8:50 a.m. in Tokyo.
Manufacturers restrained spending on equipment made by suppliers such as Tokyo Electron Ltd. following a slowdown in overseas demand for goods including semiconductors and digital cameras. A pickup in global growth may spur gains in production and investment this quarter, suggesting Japan will recover from last year's recession, economists said.
``Demand was weak at the end of the year, which probably weighed down on capital spending,'' said Ryota Sakagami, an economist at Nomura Holdings Inc.'s Financial and Economic Research Center. ``We're seeing signs that the economy is recovering this year with better growth in the U.S.,'' the nation's biggest overseas market.
Japanese stocks rose today after Intel Corp., the world's largest computer chipmaker, said that first-quarter sales will be at the high end of its forecast. The Nikkei 225 Stock Average rose 0.6 percent to 11,934.71 at 11 a.m. in Tokyo.
Recession
Japan slipped into its fourth recession since 1991 last year as export growth stalled and consumer spending faltered. The economy contracted for three straight quarters through the period ended Dec. 31, a government report on Feb. 16 showed.
Capital spending rose 3.5 percent in the fourth quarter from a year earlier, the slowest pace of growth in more than a year, a Ministry of Finance survey of companies showed on March 7.
The survey will be used along with industrial production figures to calculate capital spending, which makes up about 14 percent of the economy, in the revised estimate of GDP. Private inventories will also be recalculated using the ministry's report.
Tokyo Electron, the world's second-largest supplier of semiconductor-making devices, said on Jan. 14 that orders fell 14 percent in the three months ended Dec. 31 as semiconductor makers curbed spending. Orders for chipmaking equipment dropped about 10 percent and flat-panel display making equipment was unchanged, the company said.
Machinery Orders
Capital spending may have also been curbed by delays in construction caused by three tropical storms in the fourth quarter, the finance ministry said in its March 7 report.
Gains in production and consumer spending in January signal that Japan's economy is gaining momentum. Industrial production rose 2.1 percent, the biggest gain in nine months, and spending by households headed by a salaried worker had their biggest gain since April.
``Recent data on production and household spending suggest that Japanese growth will resume this quarter,'' Randal Quarles, U.S. Treasury assistant secretary for international affairs, said in a speech in Tokyo yesterday.
Machinery orders, which point to spending in three to six months, fell 2.2 percent in January, the government said yesterday. A Feb. 10 survey by the Cabinet Office forecast that machinery orders would rise 9.9 percent this quarter.
Anticipation of rising U.S. and global demand for music players and chips used in mobile phones is prompting companies including Toshiba Corp., Japan's largest chipmaker, to increase spending plans.
Toshiba said on Feb. 23 it may spend up to an additional 22 billion yen ($211 million) this business year to make liquid- crystal displays for mobile phones and navigation systems. The extra spending will bring the total to about 376 billion yen for the year ending March 31.
The U.S. economy expanded at a 3.8 percent annual pace in the three months ended Dec. 31, faster than initially estimated, the government said on Feb. 25. U.S. growth will probably accelerate to a 4 percent pace this quarter, according to the median estimate of in a survey of 66 economists.
The world's largest economy, which is also the biggest consumer of Japanese exports, expanded 4.4 percent last year, the most since 1999.
Market Data 
Markets 
AI
