Japan's economy in the July-September period shrank an annualized real 3.6 percent from the previous quarter, downgraded from the 3.0 percent contraction initially reported, as spending on durable goods and services was lower amid the coronavirus pandemic, government data showed Wednesday.

A technical change in the way seasonal adjustments are made led to a larger, 1.3 percent fall in private consumption, which accounts for more than half of the country's gross domestic product, revised down from a 1.1 percent decline, according to the Cabinet Office.

The overall downward revision reflected a new method in calculating seasonal adjustments introduced to give a better grasp on the state of the economy which has been battered by the public health crisis, an official told reporters.

The first decrease in two quarters in real GDP, the total value of goods and services produced in the country adjusted for inflation, corresponds to a 0.9 percent decline on a seasonally adjusted quarterly basis.

The revised figure was worse than the average projection of a 2.9 percent annualized fall by private-sector economists polled by Kyodo News.

During most of the reporting quarter, Tokyo, Osaka and some other prefectures were under a COVID-19 state of emergency. People were asked to refrain from non-essential outings and eateries were requested to close earlier and not to serve alcohol.

All emergency declarations were lifted on Oct. 1.

In household spending, expenditure on durable goods dropped 16.3 percent from the previous quarter, marking the largest fall since comparable data became available in 1994.

Spending on cars was sluggish, as major automakers were forced to cut output due to parts supply disruptions in Southeast Asia caused by a surge in COVID-19 infections and a global semiconductor shortage.

Public investment was also revised down to a 2.0 percent drop from a 1.5 percent decline.

An initially reported 3.8 percent decrease in capital spending was revised upward to a 2.3 percent drop, taking into account Financial Ministry data released last week.

On Dec. 1, the ministry reported that capital spending by all nonfinancial Japanese companies in the same quarter rose 1.2 percent from a year earlier.

Exports fell 0.9 percent and imports sagged 1.0 percent, both upgraded from 2.1 percent and 2.7 percent declines, respectively.

Private-sector economists predicted the Japanese economy to recover in the fourth quarter of 2021 as the situation around car production and consumer spending improves.

"The number of people going out has increased since late October and its effect is expected to be seen in the consumption of services. The number of new car sales in November also improved from the previous month," said Keiji Kanda, a senior economist at the Daiwa Institute of Research.

Kanda said developments related to the Omicron coronavirus variant should be carefully monitored, but he expects the economy to grow by about 8 percent on an annualized basis in the October-December period from the previous quarter.

The high pace of expansion is likely to continue until the January-March period in 2022, supported by the government's stimulus package including 100,000 yen ($880) handouts in cash and vouchers to child-rearing households as well as the resumption of the "Go To Travel" domestic tourism subsidy program, Kanda said.

Nominal GDP, not adjusted for inflation, contracted 1.0 percent, or an annualized 4.1 percent, in the reporting quarter, revised down from a 2.5 percent annualized shrinkage initially reported.

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