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MNI (Singapore)
     TOKYO (MNI) - Japan's economy likely contracted more than initially
estimated in the July-September quarter, with economists now forecasting
business investment much weaker than first expected amid increasing
uncertainties over global demand.
     The Cabinet Office will release revised (second preliminary) GDP data for
the July-September quarter at 0850JST on Monday, Dec. 10 (2350 GMT on Sunday,
Dec. 9).
     The median forecast by seven economists for revised Q3 GDP is for a 0.6%
fall on quarter, or an annualized -2.5%, compared with the preliminary estimate
of -0.3% q/q, or an annualized -1.2%. Forecasts ranged from -0.4% to -0.8% q/q,
or -1.6% to -3.2% at an annualized pace..
     In preliminary Q3 GDP data, Japan's economy posted the first contraction in
two quarters in the July-September period, down 0.3% on quarter, or an
annualized -1.2%, weighed by private consumption, capital investment and exports
following recent natural disasters.
     The downturn in the third quarter followed a gain of 0.8% on quarter, or an
annualized +3.0% in the second quarter.
     --CAPEX DOWNWARD REVISION
     Following the release of a key government survey on Monday, capital
investment in the July-September period is now forecast by economists to be
revised down to -2.2% on quarter from the initial reading of -0.2%, with
forecasts ranging from -1.2% to -3.4%.
     Economists expect private consumption, which accounts for about 60% of the
GDP, to be unrevised at -0.1% on quarter. In the preliminary data released last
month, it pushed down the Q3 GDP by 0.1 percentage point.
     The contribution of private-sector inventories to the total domestic output
is forecast to be unrevised at -0.1 percentage point.
     Net exports of goods and services -- exports minus imports -- are expected
to have made a negative 0.1 percentage point contribution to the total domestic
output, unrevised from the preliminary estimate.
     Economists also expect public investment to be unrevised at -1.9% q/q in
Q3. Forecasts ranged from -1.7% to -2.9%.
     The government will also revise the fiscal 2017 GDP due to the change of
its estimation of GDP, which in turn will cause a hefty revision of the second
preliminary GDP for the July-September period, economists said.
     --WEAK MOF SURVEY
     The key points from the Ministry of Finance quarterly survey known as the
Financial Statements Statistics of Corporations by Industry:
     --Combined capital investment by non-financial Japanese companies rose 4.5%
on year in the July-September quarter, after rising 12.8% in April-June.
     --Capex excluding software gained 2.5% on year in Q3, although decelerating
from 14.0% in Q2. Combined capital outlays (excluding software) fell a
seasonally adjusted 4.0% in Q3, marking the first q/q drop in five quarters
after rising a revised 6.1% in Q2.
     --The MOF survey, based on the demand side, is the key to calculating
revisions to Q3 GDP due out on Dec. 10. Capex in the preliminary GDP reading is
based solely on supply side data.
     --Investment in equipment remained solid on the back of the continued labor
shortages in Japan, with the impact of the U.S.-China trade dispute on Japan's
economy limited. But some firms were cautious about implementing capex amid
uncertainties over global demand.
     --However, going forward, economists expect Japan's economy to return to a
moderate growth path in the fourth quarter. Industrial production and exports
rebounded in October after their temporary dips in the third quarter caused by
natural disasters.
--MNI Beijing Bureau; tel: +86 (10) 8532-5998; email: flora.guo@marketnews.com
[TOPICS: MAJDS$,M$A$$$,M$J$$$]

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