Japanese economy contracts for third straight quarter

Japan's economy contracted for a third straight quarter, but at a slower-than-expected pace, as consumer spending and factory production continued to suffer in the aftermath of the twin disasters last March.

Real gross domestic product, a measure of the value of all goods and services produced domestically, contracted at an annualised rate of 1.3 per cent in the April-June quarter, the Cabinet Office said Monday.

Japan's second-quarter number provides a glimmer of optimism as the data showed an improvement from the first quarter, when GDP declined at a 3.6 per cent annualised rate.

Many analysts expected a much bigger contraction of around 2.6 per cent, but the economy performed better than expected.

Japan's GDP fell 0.3 per cent quarter on quarter. Capital investment by companies was up just 0.2 per cent from the previous quarter, said the cabinet office.

The stronger-than-expected outcome was mainly due to personal spending, which accounts for some 60 per cent of the economy, dipped 0.1 per cent, beating economists expectation of a higher fall.