Japan Oct tertiary index falls 0.1 pct month-on-month -
Wednesday, December 22, 2004 1:47:17 AM
afxpress.com
(Updating with details throughout)
TOKYO (AFX) - The closely-watched tertiary index, which measures spending in the service sector, fell 0.1 pct in October from the previous month, the Ministry of Economy, Trade and Industry (METI) said, further evidence of decelerating growth momentum in Japan
The tertiary index is watched closely by economists because the service sector employs more than half the Japanese workforce, and spending on services such as retailing, dining and travel is closely tied to changes in income and consumer confidence. Year-on-year, the tertiary index rose 0.2 pct, the 14th straight month of increase
Seven categories fell month-on-month, such as services, education, restaurants and hotels, electric power and utilities, property developments, medical/healthcare and transport. Gainers were wholesale and retail, complex services such as postal services, information/communications and financial/insurances. "In light of the past three months, we see the figures are more or less flat basically so the trend remains unchanged," a METI official said. The all-industries index, a proxy for overall economic activity, dropped 0.4 pct from the previous month, METI said. Year-on-year it fell 0.1 pct, the first decline since August 2003
The all-industries index adds data from the primary sector -- composed of fishing, farming, forestry and mining -- and from the secondary or manufacturing sector to data for the tertiary sector. In September, the tertiary index rose 0.1 pct from the previous month, and 1.3 pct from a year earlier. The all-industries index fell 0.1 pct from the previous month and by 1.6 pct year-on-year
The Cabinet Office announced earlier this month that the economy contracted by 0.1 pct in the April-June quarter from the previous quarter, reversing the previous estimate of a 0.3 pct growth
The Cabinet Office also revised downwards its year to March 2005 real GDP growth forecast to just 2.1 pct from the previous growth estimate of 3.5 pct
"The tertiary data out today came in with no surprises," according to Hiroaki Muto, senior economist at Sumitomo Mitsui Asset Management Co. "The figures were basically in line with a spate of bearish economic indicators out recently. I believe 'adjustments' will continue during the current fiscal year to March 2005." Muto said the fall in the all-industries index in October is due to weaker industrial output "because high-technology firms are adjusting their inventories actively after boosting output heavily since late last year to early this year." Nonetheless, Muto expects the economy to hit the bottom during the first half to September 2005, once technology companies finish unloading bloated inventories by the end of March. "Then the economy may regain upward momentum," Muto said. |
