8 Dec 2015
Japan: Upward revision to Q3 GDP on the cards – Goldman Sachs
FXStreet (Delhi) – Research Team at Goldman Sachs, suggests that after incorporating small downward revisions to inventories and public works, they forecast that Q3 real GDP will be revised to +0.2% from the preliminary -0.8% decline.
Key Quotes
"July-September GDP 2nd estimate: MOF corporate statistics for July-September showed that capex swung into positive territory, with a reading of +5.4% qoq, from -2.7% in April-June. This suggests that private-sector capex will be revised upward in the second GDP estimate, which we expect to be +4.0% qoq annualized from -5.0% in the first estimate.
With inventory investment having declined in the MOF statistics, we expect a small downward revision for inventory’s contribution to GDP to -2.2 pp from -2.0 pp. Factoring in also a small downward revision for public fixed investment, we forecast that July-September GDP will be revised to +0.2% from -0.8% in the preliminary reading. If our forecast is correct, this would mean that Japan managed a narrow escape from technical recession (two consecutive quarters of GDP contraction).
Economic data
Q3 MOF corporate statistics showed flat sales, while recurring profits declined 6.3% qoq. Capex surged, on the other hand, rising 5.4% qoq from 2.7% decline in Q2.
Industrial production grew 1.4% mom in October, marking a second month of increase. Shipments were also strong, rising 1.3%, and inventories fell 1.9%, the steepest decline since March 2011. Although still high, inventories have improved to levels last seen in 2H 2014.
Total cash wage accelerated to +0.7% yoy in November, but basic wage rose only +0.1% yoy.
November consumer confidence improved, resuming to the highest level in two years. Price expectation remains low.”
Key Quotes
"July-September GDP 2nd estimate: MOF corporate statistics for July-September showed that capex swung into positive territory, with a reading of +5.4% qoq, from -2.7% in April-June. This suggests that private-sector capex will be revised upward in the second GDP estimate, which we expect to be +4.0% qoq annualized from -5.0% in the first estimate.
With inventory investment having declined in the MOF statistics, we expect a small downward revision for inventory’s contribution to GDP to -2.2 pp from -2.0 pp. Factoring in also a small downward revision for public fixed investment, we forecast that July-September GDP will be revised to +0.2% from -0.8% in the preliminary reading. If our forecast is correct, this would mean that Japan managed a narrow escape from technical recession (two consecutive quarters of GDP contraction).
Economic data
Q3 MOF corporate statistics showed flat sales, while recurring profits declined 6.3% qoq. Capex surged, on the other hand, rising 5.4% qoq from 2.7% decline in Q2.
Industrial production grew 1.4% mom in October, marking a second month of increase. Shipments were also strong, rising 1.3%, and inventories fell 1.9%, the steepest decline since March 2011. Although still high, inventories have improved to levels last seen in 2H 2014.
Total cash wage accelerated to +0.7% yoy in November, but basic wage rose only +0.1% yoy.
November consumer confidence improved, resuming to the highest level in two years. Price expectation remains low.”