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(Z1) Off Lows, But Remains Weak


Still Vulnerable


Bullish Price Sequence

Repeats Story Initially Transmitted at 05:34 GMT Aug 7/01:34 EST Aug 7
     TOKYO (MNI) - Bank of Japan officials see that the underlying trend of
private consumption remains solid and they expect spending to follow a
"moderate" uptrend, MNI understands.
     The BOJ's supply-side Consumption Activity Index released Tuesday showed
that it posted the first quarter-on-quarter rise in two quarters in April-June,
up 0.4% after -0.5% in January-March.
     In June alone, the index also rose a modest 0.4% on month for the first
rise in two months after -1.0% in May and +1.8% in April.
     BOJ officials see no need to change the current view that "private
consumption has been increasing moderately, albeit with fluctuations, against
the background of steady improvement in the employment and income situation."
     They are focused on preliminary gross domestic product data for the second
quarter due out Friday to examine how spending rebounded after slumping in the
winter months, hit by severe weather conditions.
     BOJ officials remain vigilant against the risk that volatile financial
markets caused by the U.S.-China trade dispute will dampen consumer sentiment
and spending.
     Japan's gross domestic product for the April-June quarter is expected by
economists to have expanded a modest 0.2% on quarter, or an annualized 1.0%,
rebounding from what many see as a temporary slump in Q1, thanks to solid
consumption and business investment.
     The expected Q2 growth will follow the first contraction in nine quarters
in January-March, when GDP fell 0.2% on quarter, or an annualized 0.6%.
     The median forecast for private consumption, which accounts for about 60%
of GDP, is 0.3% on quarter in Q2 (ranging from +0.2% to +0.4%) following -0.1%
in Q1.
     The BOJ's Consumption Activity Index is designed to forecast revised
private consumption, not a preliminary estimate.
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: