In addition to exports, which are continuing to spearhead growth, stimulus measures such as tax breaks for fuel-efficient vehicles and the "eco-point" subsidy program for energy-efficient electric appliances have boosted private consumption, the think tanks said.
The Cabinet Office is scheduled to release its preliminary figures for Japan's GDP in the July-September quarter on Nov. 16. Some of the think tanks are predicting that domestic demand will likely play a greater role in economic growth in the third quarter, compared with the previous quarter, while others are anticipating that capital investment will also pick up in the July-September period after remaining sluggish in recent quarters.
To confirm expectations the Internal Affairs Ministry released data showing that Japan's unemployment rate fell to a four-month low of 5.3 percent in September, beating the market expectation that it would rise to 5.6 percent.
Many Japanese companies, particularly exporters, moved swiftly to cut jobs and production in response to a slump in demand caused by the global economic downturn. But since Japan's economy grew in April-June for the first time in five quarters on rebounding exports and government stimulus measures employment is straightly rising up again.
Yet another survey from the Internal affairs ministry showed deflation in Japan eased slightly in September following four straight months of record declines in consumer prices. Core prices, which exclude those of volatile fresh food, dropped 2.3 percent in the month from a year earlier, after an unprecedented 2.4 percent slump in August. Compared with the previous month, prices rose 0.1 percent -- the first increase in six months.
Some economists warned against being too upbeat on the economic outlook. "There are concerns that price drops in services and other wide-ranging sectors may pressure wages, leading consumers to seek even lower prices," Credit Suisse economists wrote in a report.
"A further credit easing is needed" as deflation remains, they said. (Breitbart)