Japan's economy managed to expand again in the third quarter.
The Cabinet Office reported today that Japan's gross domestic product increased 1.2 percent in the third quarter. This was the second consecutive quarter of expansion after the economy had grown 0.7 percent in the second quarter.
Exports made an important contribution to third quarter growth, jumping 6.4 percent for the quarter, but capital spending also made a positive contribution, increasing 1.6 percent from the previous quarter, its first increase in six quarters.
The third quarter growth rate was the fastest since the first quarter of 2007 but the acceleration in the economy is unlikely to be maintained in subsequent quarters. Fiscal stimulus has so far helped boost economic growth but as the stimulus effects start to wane, growth may slow. Indeed, reports last week showed that some indicators have stopped improving.
On Friday, the Cabinet Office reported that the consumer confidence index for households in October was 40.5, unchanged from September. Prior to last month, the index had risen every month since hitting a low in December last year.
Earlier last week, the Cabinet Office had reported that its economy watchers index, based on a survey of workers in economically-sensitive jobs, fell to 40.9 in October. This was the lowest reading in five months and the biggest decline in 10 months.
Still, a second consecutive quarter of expansion for the Japanese economy rounds out a relatively positive third quarter for the global economy as some of the other major economies also returned to growth. On Friday, the euro area reported that GDP in the region grew 0.4 percent in the third quarter after contracting 0.2 percent in the second quarter. Last month, the United States reported that its economy grew 0.9 percent, or 3.5 percent annualised, after having contracted at an annualised rate of 0.7 percent in the previous quarter.
So Japan's GDP report today confirms that, at least in the third quarter, the global economy remained on a path to recovery.