TOKYO - Japan's economy grew twice as fast as originally estimated in the third quarter thanks to big gains in capital expenditure, revised data showed on Friday, with expansion seen to continue thanks to buoyant exports.
The capital expenditure component of gross domestic product was revised to a rise of 1.1 percent from the previous quarter, well over the forecast 0.4 percent growth, and soaring above the preliminary 0.2 percent reading.
The economy grew an annualized 2.5 percent in July-September, more than the median estimate for 1.5 percent annualized growth and more than the preliminary reading of a 1.4 percent annualized expansion.
Real wages rose in October for the first time in almost a year, offering some hope that consumer spending will pick up, separate data showed.
The revised figures showed that Japan was in its longest uninterrupted period of growth since comparable data became available in 1994.
This is a boon to the government as it is expected to agree later on Friday a spending package to subsidize education and encourage more corporate investment.
"The economy is doing well, but annualized growth above 2 percent seems a little too quick," said Norio Miyagawa, senior economist at Mizuho Securities.
"I expect that exports and capital expenditure will lead growth next year, but the pace will moderate to around 1 percent."
The figure translates into quarter-on-quarter growth of 0.6 percent, versus a preliminary reading of 0.3 percent growth and the median estimate for 0.4 percent growth.
Steady economic expansion also offers hope to the Bank of Japan that inflationary pressure will build up next year and nudge consumer prices closer to its 2 percent inflation target.
Capital expenditure was revised up because wholesale companies and retailers are increasing investment to deal with increased inbound tourism, a Cabinet Office official told reporters.
Inventories contributed 0.4 percentage point in the third quarter, which was revised up from a preliminary 0.2 percentage point contribution, due to a build up of chemicals and plastics used in manufacturing, the official said.
Net exports contributed 0.5 percentage point in the third quarter, unchanged from the preliminary reading.
Private consumption fell 0.5 percent in July-September, also unchanged from the preliminary reading.
Real wages rose 0.2 percent in October marking their first rise since December 2016 in a sign a tight job market may finally be leading to higher salaries.
Japan's economy has expanded for 7 consecutive quarters, and many economists expect growth to continue as consumer spending gains strength and export growth is seen on track to continue.