9 December 2002, 10:27  Japan's GDP Grew 0.8% in 3rd Qtr, More Than Estimated

Tokyo, Dec. 9 (Bloomberg) -- Japan raised its estimate for third-quarter economic growth as consumers in the world's second- largest economy spent more than initially reported. Gross domestic product rose 0.8 percent last quarter, seasonally adjusted, from the second quarter. That compares with an initial estimate of 0.7 percent growth. Growth in the second quarter was revised to a gain of 0.9 percent from an initial estimate of 1 percent growth, the Cabinet Office said. Consumer spending, which accounts for more than half of the economy, grew 1 percent, more than an initial estimate of a 0.8 percent gain. Spending is already faltering as companies such as Advantest Corp. cut jobs and wages in response to sagging exports, pushing Japan closer to its fourth recession in a decade. ``It's not possible to hope for a sustained recovery in consumer spending anytime soon,'' said Minako Iida, an economist at Deutsche Securities Ltd. ``It's likely that the economy will return to recession, possibly in this or the next quarter.'' The Nikkei 225 Stock Average gained 0.4 percent to 8900.82 as of 11 a.m. in Tokyo after falling as much as 0.7 percent on concern that a government report today may show machinery orders, an early indicator of business investment, dropped in October. Japan's economy grew at an annual pace of 3.2 percent in the July-September quarter, faster than the initial estimate of 3 percent growth, today's report showed. Exports grew 0.6 percent in the third quarter, today's report showed, more than the earlier estimate of a 0.5 percent gain and less than the second quarter's 5.9 percent
expansion. Job Cuts
Companies such as Advantest, the biggest maker of memory-chip testing machines, and Sanyo Electric Co. are cutting jobs and wages, pushing the unemployment rate up to 5.5 percent in October, matching December's record. Advantest will cut 600 jobs in hopes of saving 10 billion yen ($81 million) annually in labor costs. Sanyo Electric Co., the world's biggest maker of mobile-phone batteries, said it would cut wages by as much as a third in home appliance manufacturing and transfer about 1,400 workers in the division to other units. In a sign of faltering consumer demand this quarter, Japanese household spending declined 2.3 percent in October, seasonally adjusted, following a 5.4 percent increase in September, a government report said last week.
Companies are also cutting back. Machinery orders probably fell 3.5 percent in October, according to the median forecast of 26 economists in a Bloomberg News survey. The machinery orders report will be announced at 2 p.m. today Tokyo time. Capital spending fell a revised 0.5 percent in the third quarter, compared with a gain of 0.3 percent in the second quarter. Investment is falling as Japanese companies pay debts instead of spending on new factories and new machines, economists said.//www.quote.bloomberg.com

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