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Robust capital spending boosts Japan's Q2 GDP growth

Japan's economy expanded at a seasonally adjusted annual rate of 3.0% in the second quarter ended June, up from the preliminary 1.9% growth estimate, revised Cabinet Office data showed.

The updated second-quarter growth expanded 0.7% quarter over quarter in real, price-adjusted terms.

Private consumption, which accounts for more than half of GDP, rose 0.7% during the quarter, unchanged from the preliminary estimate.

Capital expenditure grew 3.1% from the previous quarter, the fastest increase since the start of 2015 on the back of increased procurement of production equipment for cars and semiconductors.

A finance ministry survey last week showed corporate capex rose at the fastest pace in 11 years in the second quarter, driven by procurement of production equipment for cars and semiconductors.

Capital expenditure has been a bright spot in Japan's economy, but companies remain cautious about sharing more of their profits with workers, keeping a lid on private consumption and inflation.

Domestic demand rose 0.9%, up from the initial reading of 0.6% increase, while public demand increased 0.2% for the quarter, unchanged from the initial estimate.

As of Sept. 7, US$1 was equivalent to ¥111.16.