JP: GDP


Sun Jun 07 18:50:00 CDT 2015

Consensus Actual Previous
Quarter over Quarter 0.8% 1.0% 0.6%
Q/Q change - SAAR 2.9% 3.9% 2.4%
Year over Year -1.0% -1.4%

Highlights
Japanese growth in the first quarter was revised way beyond forecasts, thanks to a huge change in the estimates for business spending. First quarter gross domestic product was revised upward to 1.0 percent on the quarter from the original estimate of 0.6 percent. Expectations were for an increase of 0.8 percent. GDP was up an annualized pace of 3.9 percent. However, GDP was down a revised 1.0 percent after initially estimated at 1.4 percent. GDP was revised up to 0.9 percent from minus 1.0 percent for the fiscal year 2014.

Among the components, CAPEX was revised to 2.7 percent on the quarter from the preliminary 0.4 percent. However, household consumption was unrevised at only 0.4 percent. With 60 percent of the Japanese economy consumer driven, this indicates that the sector is slow in recovering from the increased sales tax. Government consumption was down 1.5 percent and subtracted from growth.

Definition
Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy.

Description
Gross domestic product is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Investors in the stock market like to see healthy economic growth because robust business activity translates to higher corporate profits. Bond investors are more highly sensitive to inflation and robust economic activity could potentially pave the road to inflation. By tracking economic data such as GDP, investors will know what the economic backdrop is for these markets and their portfolios.

The GDP report contains a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. GDP components such as consumer spending, business and residential investment, and price (inflation) indexes illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.