December 7, 2016 05:50 CST

Consensus Actual Previous
Quarter over Quarter 0.5% 0.3% 0.5%
Q/Q change - SAAR 2.0% 1.3% 2.2%
Year over Year 1.0% 0.8%

Revised estimates show Japan's gross domestic product grew by 0.3 percent quarter-on-quarter in the three months to September. This is weaker than the preliminary estimate of 0.5 percent, published last month, and the consensus forecast of 0.5 percent. In annualised terms, GDP grew 1.3 percent in the three months to September, compared with the preliminary estimate of 2.2 percent and the consensus forecast of 2.0 percent.

In year-on-year terms, Japan's GDP grew 1.0 percent in the three months to September, up from the preliminary estimate of 0.8 percent.

Today's data shows stronger private consumption in the three months to September compared with the initial estimate, with growth revised up from 0.1 percent to 0.3 percent. Upward revisions were also made to growth in private residential investment, from 2.3 percent to 2.6 percent, and public demand, from 0.2 percent to 0.3 percent. These upward revisions were offset by a weaker estimate for growth in private non-residential investment, down from flat to minus 0.4 percent, while the contribution to growth from net exports was also revised down from 0.5 percent to 0.3 percent.

The estimated GDP quarter-on-quarter growth for the three months to June has also been revised, up from 0.2 percent previously to 0.5 percent (from 0.7 percent to 1.8 percent in annualised terms). Today's data release also incorporates a change in the base year for GDP calculations from 2005 to 2011, with various other changes to methodology adopted to align with updated international standards.

The various revisions to data for the last two quarters show that growth in Japan's economy slowed in the three months to September but has been positive for each of the last three quarters. Growth would likely have been stronger in the three months to September if not for the impact of typhoons, suggesting there may be some upside for domestic activity, particularly for private consumption, in the current quarter.

Gross Domestic Product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy.

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.