MNI DATA PREVIEW: Japan Q1 GDP Seen Revised Up On Capex

--Latest MOF Survey Points To Improvement In Q1 GDP

     TOKYO (MNI) - Japan's economy likely contracted less than initially

estimated in Q1, with business investment appearing to be stronger than

initially expected, economists in the wake of a key government survey released

this week.

     The median forecast of six economists for revised Q1 GDP is for a fall of

0.5% on quarter, or an annualized -2.1%, compared with the preliminary estimate

of -0.9% q/q, or an annualized -3.4%. Forecasts ranged from -0.3% to -0.8% q/q,

and -1.3% to -3.0% annualized.

     The Cabinet Office will release revised Q1 GDP data at 0850 JST on Monday,

June 8 (2350 GMT on Sunday, June 7).

     --CAPEX UPWARD REVISION

     Capital investment is seen revised up to +1.6% on quarter from the initial

reading of -0.5%, with forecasts ranging from +1.2% to +3.3%, based on the

results of the Ministry of Finance's survey released Monday.

     Non-financial Japanese firms increased capital investment by 4.3% y/y in Q1

after falling 3.5% in Q4, which was the first drop in 13 quarters.

     Capex excluding soft-ware rose 3.5% y/y in Q1, reversing a 5.0% fall in Q4.

This will be incorporated into second preliminary GDP. Excluding software, it

rose 7.2% q/q in Q1, accelerating from the 4.6% fall in Q4. Combined capital

outlays (including software) rose a seasonally adjusted 6.7% in Q1 after falling

4.0% in Q4.

     The MOF survey, based on the demand side, is the key to revised Q1 GDP

calculations. Capex in preliminary GDP, based solely on supply side data, fell

0.5% Q/Q, pushing total domestic output down by 0.1 percentage point.

     Economists expect private consumption, which accounts for about 60% of GDP,

to be unchanged at -0.7% q/q. In the preliminary data released last month, it

pushed down Q1 GDP by 0.4 percentage point.

     The contribution of private-sector inventories is forecast to be revised to

-0.1 percentage point from -0.0 percentage point.

     Net exports of goods and services -- exports minus imports -- are expected

to have made a negative 0.2 percentage point contribution to the total domestic

output, unchanged from the preliminary estimate.

     Economists also expect public investment to be revised to -0.3% on quarter

in Q1 from -0.4%.

     --WEAKER Q2 GDP

     Moving forward, economists expect Japan's economy to be weaker, possibly

bigger contraction than Q1, weighted down by weak exports, production and

private consumption caused by the spread of the coronavirus.

     The average economist forecast for Q2 GDP growth is annualized at -21.33%,

according to the latest monthly ESP Survey of 33 economists by the Japan Center

for Economic Research conducted between April 27 to May 11.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: M$A$$$,M$J$$$]