• Japanese GDP grew double the pace initially reported in Q3, helped by upward revisions to business investment and private inventories.
• The increase was higher than any individual forecast offered to Thomson Reuters.
• The economy has now expanded for seven consecutive quarters, the longest stretch of uninterrupted growth since early 2001.

Japan’s economy grew faster than first thought in the three months to September.

According to Japan’s Cabinet Office, real GDP grew by 0.6% in the third quarter, higher the preliminary estimate of 0.3% and above the 0.4% increase expected.

Underlining just how large the quarterly beat was, it was above any individual economist forecast offered to Thomson Reuters.

With quarterly GDP growth revised sharply higher, the seasonally adjusted annual rate (SAAR) jumped to 2.5%, the same level reported in the three months to June.

That breezed past expectations for a slower increase of 1.5% and was a substantial upgrade on the 1.4% preliminary reading.

Japan’s economy has now expanded for seven consecutive quarters, the longest stretch of uninterrupted growth for the world’s third-largest economy since early 2001.

Nominal GDP — including movements in volumes and prices during the quarter — rose by a faster 0.8%, leaving the SAAR at 3.2%.

The GDP deflator, a broad measure of price changes in the economy, rose 0.1% over the year, unchanged from the preliminary estimate. Even with solid economic growth, there are few signs that price pressures are building.

Helping to explain the quarterly GDP upgrade, domestic demand added 0.1 percentage points (ppts) to growth, a stark turnaround from the 0.2ppts drag reported previously.

Business investment contributed 0.2ppts to quarterly GDP, an upgrade on the flat preliminary estimate, while inventories added 0.4ppts, double the level of the previous estimate.

Private consumption, the largest part of the economy at around 60%, detracted 0.3ppts from growth, unchanged from the preliminary estimate.

Public demand also declined, slicing 0.1ppts from quarterly GDP. However, this was half the level initially reported.

External demand — or net exports — added 0.5ppts to GDP, the same as the level in the preliminary estimate.

This table from the Japanese government shows both the percentage change and percentage point contribution to quarterly GDP. We’ve highlighted the latter in the right-hand column.

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