Japan's economy grows for fourth straight quarter

Japan's economy was stronger than expected in the July-September period, as consumer spending offset weakening exports and a strong yen.

Real gross domestic product expanded at an annualized rate of 3.9 percent over the three-month period, the Cabinet Office said Monday.

The result outpaces Kyodo news agency's average market forecast for an annualized 2.6 percent increase.

On a quarterly basis, the growth translates to 0.9 percent growth from the April-June period.

Japan, the world's No. 3 economy, benefited from higher spending by businesses and consumers, who rushed to buy eco-friendly vehicles before government incentives expired. Unusually high temperatures drove sales of summer drinks and clothes, while tobacco sales jumped as smokers stocked up on cigarettes ahead of an Oct. 1 tax hike.

Private consumption, which accounts for about 60 percent of GDP, rose 1.1 percent from the previous quarter, the data showed. Corporate capital investments climbed 0.8 percent.

Economists warn, however, that because one-time factors fueled last quarter's robust growth, the momentum is unlikely to last. Slowing global demand is hurting exports and factory production, while a persistently strong yen continues to batter companies.

Goldman Sachs said before Monday's data that it expects growth to "contract significantly" in the fourth quarter.

Worried about looming threats, Prime Minister Naoto Kan's Cabinet approved last month $63 billion in new stimulus spending. The package, which includes financial support for small businesses and local economies, will help lift GDP by 0.6 percentage points, the government estimates.

GDP is the total value of the nation's goods and services, and real fgures incorporate price and seasonal adjustments.