The Japanese economy expanded 1.2% in the 3rd quarter, a figure that came in higher than expectations, and was primarily driven by a strong rebound in domestic demand. In annual terms, growth was up 4.8%, following a 2.7% increase in the 2nd quarter. Private consumption was up 0.7% on the quarter, the second straight quarter of gains, and can help alleviate some fears that the recovery will be short changed by households unwilling to spend. Residential investment faltered for a third straight quarter (-7.7%), but capital spending rose 1.6%, more than three times the pace projected by economists.

The report bolsters the case that the global recovery is gaining steam, as the Euro-zone exited its recession in the 3rd quarter, and China has posted strong data including rising industrial production. The Bank of Japan, which meets later this week, will have to decide whether to begin to ease its loose monetary policy, though policy makers seem at this point reluctant to move away from their accommodative stance.

Official Figures Provided by: Cabinet Office (PDF)