The annualised 1.1 percent increase in gross domestic product compared with a median market estimate of 2.0 percent growth in a Reuters poll. It also followed an upwardly revised 1.9 percent expansion in the previous quarter, extending the economy’s growth streak to three consecutive quarters.
The reading translates into a quarterly rise of 0.3 percent, compared with the median estimate of a 0.5 percent increase.
Private consumption, which accounts for more than half of economic output, was flat, falling short of a market estimate of a 0.5 percent increase.
Consumption and wage trends are key factors the Bank of Japan is watching to gauge economic strength and determine the need for additional rate hikes.
Capital spending, a key driver of private demand, fell 1.2 percent in the second quarter, versus a market forecast for a 0.4 percent increase.
Net external demand, or exports minus imports, added 0.5 percentage of a point to growth.
Exports remained resilient thanks to solid US demand for Japanese hybrid vehicles and sustained global investment in artificial intelligence that supported shipments of semiconductor-related equipment and components.
Looking ahead, analysts cautioned that rising import costs and mounting upstream price pressures could eventually feed through to consumers, posing a risk to spending later this year.
Private consumption could also see a pull-back in the July-September quarter, after policy and regulatory changes temporarily boosted demand for durable goods such as automobiles and air conditioners in April-June.
A survey this month by the Japan Center for Economic Research showed 37 economists forecast annualised GDP growth to slow to an average 0.05% in the July-September quarter. (Reuters)
