Japanese economic growth soared in the three months to June, logging the fastest increase in more than two years.
According to data released by the government on Monday, real GDP surged by 1% in the June quarter, easily surpassing expectations for a smaller increase of 0.6%.
The expansion was larger than any individual economic forecast offered to Thomson Reuters, putting the scale of the beat into perspective.
With the quarterly growth shooting the lights out, the seasonally adjusted annual rate (SAAR) of growth soared to 4%, again topping forecasts for an expansion of 2.5%.
That marked the fastest increase since the first quarter of 2015, and extended Japan’s streak without recording a negative growth quarter to six, the longest stretch since mid-2006.
Growth in the March quarter was also revised up to 1.5%, higher than initial estimates of 1%.
Helping to explain the large headline beat, private consumption — the largest component in the Japanese economy at around 60% — grew by 0.9% over the quarter, adding 0.5 percentage points (ppts) to real GDP growth.
It was the fastest increase since the first quarter of 2014, and was close to double the 0.5% increase expected.
Business capital expenditure also impressed, doubling market expectations with an increase of 2.4%. It was the largest expansion since the first quarter of 2014, and added 0.4ppts to growth.
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Public demand grew by 1.3%, adding 0.3ppts to real GDP growth.
Combined, total domestic demand increased by 1.3ppts, completely offsetting a 0.3ppts drag from net exports.
Despite the impressive report, Japanese markets are largely unchanged following the release of the report, reflecting that the outlook for inflation, rather than where growth has been, remains the key driver for monetary policy settings from the Bank of Japan.