The Japanese government confirmed in a revised report that Japan's economy shrank for the three months ending in September, which provided further rationality for the economic stimulus plan announced by Prime Minister Sanae Takaichi last month. GDP contracted at an annual rate of 2.3% in the third quarter, mainly affected by lower than expected corporate spending. This was the first decline in six quarters. The decline was larger than the 1.8% initial data, and the median decline was expected to be 2%. The weak data performance supported the high market's stimulus plan, which included the largest increase in spending since the pandemic. This adds complexity to the Bank of Japan's upcoming policy decisions, but it probably won't change its established course of gradually raising interest rates. Another Ministry of Labor data released on Monday showed that actual wages fell 0.7% year on year in October. This is the tenth consecutive month of decline. Nominal wages rose 2.6%, and basic wages also climbed at the same rate, suggesting that wage growth continues, but the growth rate is still lower than the rate of inflation. Japan's inflation rate has remained at or above the Bank of Japan's 2% target for more than three and a half years, the longest record since the early 1990s.

The Japanese government confirmed in a revised report that Japan's economy shrank for the three months ending in September, which provided further rationality for the economic stimulus plan announced by Prime Minister Sanae Takaichi last month. GDP contracted at an annual rate of 2.3% in the third quarter, mainly affected by lower than expected corporate spending. This was the first decline in six quarters. The decline was larger than the 1.8% initial data, and the median decline was expected to be 2%. The weak data performance supported the high market's stimulus plan, which included the largest increase in spending since the pandemic. This adds complexity to the Bank of Japan's upcoming policy decisions, but it probably won't change its established course of gradually raising interest rates. Another Ministry of Labor data released on Monday showed that actual wages fell 0.7% year on year in October. This is the tenth consecutive month of decline. Nominal wages rose 2.6%, and basic wages also climbed at the same rate, suggesting that wage growth continues, but the growth rate is still lower than the rate of inflation. Japan's inflation rate has remained at or above the Bank of Japan's 2% target for more than three and a half years, the longest record since the early 1990s.