Japan's economy grew much slower than initially estimated in the third quarter, revised data showed, as capital expenditure dried up and companies ran down inventories - renewing concerns about Japan's growth prospects.
The Cabinet Office said on Thursday the economy grew at a 1.3 percent annualized rate in July-September, a severe revision from the 2.2 percent annualized growth first estimated and barely over half the median estimate for a 2.4 percent annualized expansion.
Capital expenditure fell 0.4 percent in the quarter, versus the preliminary estimate of 0.0 percent, as steel and real estate companies reduced investment.
In one positive sign, consumer spending was revised up, but the data on the whole could temper optimism that the economy could accelerate heading into next year.
"Capex and consumer spending are the twin engines of domestic demand, and I'm not convinced that both will recover strongly," said Norio Miyagawa, senior economist at Mizuho Securities.
"We have government stimulus and a weak yen, so the economy will continue to grow, but growth will be modest."
Inventories subtracted 0.3 percentage point from growth, more than a preliminary reading of a 0.1 percentage point contraction, which showed that a recent buildup in inventories was slowing, and a positive sign that companies were able to sell excess goods, Miyagawa said.
Net exports added 0.3 percentage point to growth in July-September, less than a 0.5 percentage point contribution in the previous quarter.