Japan officially out of technical recession

After today's second estimate of third quarter GDP, released by cabinet office, it seems things are not as dull as it seems with Japan. Today's better than expected GDP figure will provide ammunition to Bank of Japan's (BOJ) hawkish members such as Mr. Sato and Mr. Kiuchi.

GDP grew by 1% annualized rate in third quarter, sharply in contrast to previous figure of -0.8% contraction. Economists expected improvement but just by 0.2%. With today's figure Japan is technically out of recession. Japanese economy was thought to have dropped into recession after first flash reading, which got revised today.

To add to the array of good news, second quarter GDP contraction got revised from -1.2% to just -0.7%.

To add to the good news is strong private demand.

Private consumption rose by 0.4% annualized pace and residential investment at 2%. Private non-residential investment grew by 0.6%. Exports in this flash was brighter contributor.

With improvement in both GDP and private consumption, coupled with lower than expected stimulus from European Central Bank (ECB), it looks like BOJ is likely to hold fire for now.

Yen is marginally firmer, trading at 123.1 per Dollar.