By Kaori Kaneko

TOKYO (Reuters) - Japan's economy likely expanded for a third straight quarter in July-September, a Reuters poll showed on Friday, but weak private consumption and lackluster company capital spending suggest growth will remain fragile.

The world's third-largest economy is expected to have grown at an annualized rate of 0.9 percent in the third quarter, the poll of 22 economists found, following a 0.7 percent expansion in the second quarter.

That would translate into a muted 0.2 percent rise for the quarter, the same pace as in the second quarter.


"The economy is escaping from a lull but we cannot say it returned to a track of sustainable growth because private spending and capital expenditure remained low," said Hidenobu Tokuda, senior economist at Mizuho Research Institute.

"The economy is expected to pick up moderately from October-December but downside risks continue to stay."

A recovery in automobile production which may have contributed to the economy in July to September has likely waned, though government stimulus measures are expected to continue to provide some support for activity, he said.

Private consumption, which accounts for roughly 60 percent of gross domestic product (GDP), likely stalled in the last quarter after improving in the previous two quarters, economists predicted.

Capital spending was seen up a marginal 0.1 percent, but still rising for the first time in three quarters.

The Cabinet Office will announce the GDP data on Nov. 14 at 8:50 a.m.(2350 GMT, Nov. 13).

The poll also found core machinery orders, a leading indicator of capital spending, likely slipped 0.8 percent in September from the previous month, down for the second straight month.

The expected fall would follow a 2.2 percent decline in August. The highly volatile data series is regarded as an indicator of capital spending in the next six to nine months.

Core orders, which exclude those for ships and electrical equipment, likely rose 3.5 percent in September from a year earlier after a 11.6 percent jump in August.

"External demand is weak due to an impact from a strong yen, which could prompt manufacturers to become cautious about capital expenditure," said an analyst at SMBC Nikko Securities at the survey.

The Cabinet Office will release machinery orders on Nov. 10

On Wednesday, the finance ministry will release the current account balance for September, which is expected to show a surplus of 1.9602 trillion yen ($19.02 billion).

The Bank of Japan's corporate goods price index (CGPI) on Friday, which measures the price companies charge each other for goods and services, was seen down 2.7 percent in the year to October.

(Reporting by Kaori Kaneko; Editing by Kim Coghill)

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