"We really can't say that the conditions have been achieved to raise the sales tax as planned."
- Etsuro Honda, a Shizuoka University professor and one of two outspoken advisers to Abe
Japan's seasonally adjusted tertiary industry activity index declined 0.3% in June from a month earlier. The index came at 100.6 versus 100 for the base year of 2005, being down for nine of the 13 industries covered. Industries, which contributed to the drop included real estate, services, retail trade, utilities and personal services, whereas a gain was recorded in communications, health care and learning support.
Meanwhile, according to recently published data, Japan's economy expanded 0.6% in the second quarter from Q1, marking the third consecutive quarter of expansion, and adding to optimism that Shinzo Abe's reflationary policies are having positive effects. Nevertheless, the advance was smaller than market's expectation for a 0.9% rise. The Q2 GDP figure translated into an annualised growth of 2.6% compared to a forecast of a 3.6% advance.
Also, the BOJ said that an index, which measures the prices of domestic corporate goods, increased 0.5% to 102.1 in July from the previous year. On an annual basis, corporate goods prices increased 2.2%, overshooting expectations for 1.9% after rising 1.2% a month earlier. Export prices declined 0.1% on month and 1.5% on year, whereas import prices decreased 0.5% and 0.4%, respectively.
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