Goldman Sachs citing better data for August:
raise our tracking estimate for 3Q2017 real GDP to +1.5% qoq annualized, from +1.2% previously
Our upward revision mainly reflects stronger-than expected recovery in export activities since July
- Real exports are recovering rapidly, rising +3.0% mom in August, after +1.7% in July
- leading us to revise up real GDP export growth to +6.0% qoq annualized from +3.8%
Our forecasts on other demand components are largely unchanged
- Personal consumption is likely to decelerate to virtually zero growth in 3Q, following strong 2Q spending
- Real core household spending declined -0.1% mom in August following a similar decline in July
Private capex is expected to remain on a moderate recovery path
Meanwhile, a temporary fall-off in public works, which pushed up the overall GDP in 2Q, is inevitable in our view
Production also picked up +2.1% mom in August
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While the economy pick up is great news for Japan, the BOJ is constrained by their inflation goal.
GS says on inflation:
- August national core CPI (excluding fresh food) accelerated to +0.7% yoy
- However, the main factors lifting it were energy and medical care, while other components remain muted
- In fact, August national new core CPI (excluding freshfood and energy) remained stagnant at +0.2% yoy, and the September Tokyo new core CPI at 0.0% yoy.
