Gross domestic product rose at an annual 1.3 percent pace, slower than the 4.8 percent reported in preliminary figures last month. The economy expanded 0.3 percent in the third quarter from the previous three months, the Cabinet Office said, slower than the 1.2 percent first reported.
Today’s report showed companies are cutting investment in plant and equipment to protect earnings, fueling concern about a recovery that’s already under threat from deflation and a rising yen.
Prime Minister Yukio Hatoyama unveiled a 7.2 trillion yen ($81 billion) stimulus package on December 8, the first for his Cabinet, and the Bank of Japan last week decided a 10 trillion yen credit program to support the economy. The new stimulus includes employment subsidies, loan guarantees and incentives to buy energy-efficient products. Japan has compiled four spending packages since September 2008 totaling more than 29 trillion yen.
Investment by companies drove the downward revision in last quarter’s growth. Capital spending fell 2.8 percent in the three months through September from the previous quarter. That compares with the 1.6 percent increase reported last month.
Consumer spending, which makes up about 60 percent of the economy, climbed 0.9 percent, compared with a 0.7 percent gain initially reported. Exports increased 6.5 percent from the previous quarter, compared with the 6.4 percent first published. Some exporters are scaling back their spending plans as the yen’s rise to a 14-year high threatens their profits and market share.
Falling prices have been squeezing profit at home, prompting the government to declare last month that the country is back in deflation and push the Bank of Japan to do more to spur the economy. The central bank released a 10 trillion yen credit program last week, a move that Deputy Prime Minister Naoto Kan said yesterday had a considerable impact” on weakening the yen.