"Japan's economy can emerge from recession in the first quarter as consumer spending and exports are expected to pick up"
- Yasuo Yamamoto, senior economist at Mizuho Research Institute
Activity at Japanese tertiary industry dropped unexpectedly in November, indicating weak domestic demand in the world's third largest economy. According to the Ministry of Economy, Trade and Industry, a gauge, which measures the domestic service sector in Japan, such as information and communication, electricity, gas heat and water, transport, wholesale and retail trade, shrank by 0.3% in November, after a 0.1% expansion in the previous month. Thursday's reading indicates that companies are reluctant to increase their spending due to the growing uncertainty over the future economic performance.
"Japan's economy can emerge from recession in the first quarter as consumer spending and exports are expected to pick up," said Yasuo Yamamoto, senior economist at Mizuho Research Institute. "But in order for growth to accelerate even further, capital expenditure needs to improve. Unfortunately, capital expenditure is likely to remain weak."
"There have been signs of the economy bottoming out," Yoshiki Shinke, chief economist at Dai-Ichi Life Research Institute. "It would not be surprising to see the decline in the coincident index coming to a halt in the near term."
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