Annually, the economy grew 3.3%, topping the expected 3.2% rise for the latest quarter. The final result exceeded the 2.4% growth estimated in the preliminary report.
The upside revision in growth was influenced by higher domestic demand and private non-residential investment.
Private business spending revised up
According to the revised estimate, domestic demand was up 0.3% compared to the 0.2% increase estimated earlier. Private demand gained 0.6%, up from the 0.3% growth in the initial estimate, contributing 0.4 percentage point to GDP compared to 0.2 percentage point earlier. However, growth in household consumption slipped to 0.8% from the earlier estimated 0.9%, reducing the contribution to 0.4 percentage point, from 0.5 percentage point previously.
Private non-residential investment rose 0.3% in the first quarter, according to the revised estimate. This compared to a 0.9% decline estimated in the preliminary report. Gross fixed capital formation was a revised minus 0.1% versus a minus 0.7% estimated earlier.
The revised estimate of private non- residential investment was consistent with the corporate capital spending data and the machinery order report, released last week.
The Ministry of Finance said last Monday, that the total capital spending by Japanese companies rose 13.6% from the previous year in the first quarter. This exceeded the market consensus of 10.1% growth. Investment in plant & machinery, excluding software, rose 14.2%, the report said.
The cabinet office said Friday, that the Japanese private-sector core machinery orders rose 2.2% in April, the first increase in three months. The growth was driven by a 10.5% increase in orders from non- manufacturing sector, while orders from manufacturing sector decreased 1.3%.
Imports of goods and services rose a revised 0.4%, slower than 0.9% rise reported in the preliminary report, while exports growth remained unrevised at 3.3%. The contributions of exports and imports to GDP remained unrevised at minus 0.5 and minus 0.1 percentage points respectively.
The GDP deflator slipped 0.3%, more than the 0.2% decline estimated in the preliminary report.
BoJ Board Meets on Thursday
Meanwhile, the Bank of Japan policy board is scheduled to meet Thursday for its next policy decision. The central bank has been reiterating its stance that it would adjust the interest rates gradually ensuring sustained growth with price stability.
Reacting to the speculation of a rate hike, following the release of the corporate capital spending report, the BoJ Governor said on June 5,” We do not make policy decisions based on each piece of data.`
`Taking necessary steps in a timely manner is needed for economies to enjoy lasting growth with stable prices, and a steady economic expansion is the biggest factor that helps maintain stability in market expectations,` Fukui said.
Japanese Vice Finance Minister Hideto Fujii said on June 7, that his ministry would closely monitor the moves of long-term interest rates.
`It is undesirable that long-term rates move in an excessive manner against the backdrop of economic recovery. We need to monitor the moves closely,` he told a regular press conference.
A majority of economists expect the BOJ to raise interest rates sometime between late summer and autumn.
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