Japan's economy grows 2.2 pct year-on-year in last quarter

Economic IndicatorsAssociated Press

Stronger exports and housing investment helped Japan's economy grow at a 2.2 percent annualized pace in the July-September quarter, better than many analysts had anticipated and fast enough to stave off further central bank stimulus for now.

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The Cabinet Office reported Monday that based on preliminary estimates, the economy expanded 0.5 percent from the previous quarter.

Initial growth estimates are often revised significantly based on updated data.

"Japan's GDP figures are notoriously volatile, so we wouldn't be too surprised it output fell in the current quarter," Marcel Thieliant of Capital Economics said in a research note. "However, business surveys climbed to multi-month highs in October, which suggests that growth is holding up."

The 2.2 percent pace of year-on-year growth was sharply higher than the 0.2 percent pace seen in April-June.

With unemployment at about 3 percent, aggregate income has risen even if wages have remained flat.

The strong growth data suggest the Bank of Japan is unlikely to boost stimulus anytime soon, despite scant progress in spurring the inflation the government and central bank say is needed to sustain growth in the long run.

Share prices rose early Monday as the yen weakened to 107.37 yen to the U.S. dollar, a trend that would help Japanese exporters. The Nikkei 225 stock index was up 1.5 percent at 17,640.84 by late morning.