A Reuters poll showed that Japan's economy likely contracted faster than expected in the July-September quarter, as capital spending stalled among companies hit by supply constraints.
The third quarter of the world's third-largest economy likely shrank by 3.1%, according to a poll of 19 economists, a slightly bigger slump than the 3.0% contraction in the government's preliminary estimate last month.
Separate data is expected to show household spending fell for the third consecutive month in October, although the drop was smaller than in the previous two months, a sign that consumer sentiment had improved as COVID 19 cases remained low.
While pressures on domestic consumption are easing, next week's data suggests that it may take a while for Japan's economy to rebound, even as policymakers have kept monetary policy loose and fiscal policy expansionary to help the pandemic recovery.
Economists expected the gross domestic product GDP revision to show that capital expenditure shrank by 3.9% in July-September, a slightly bigger contraction than the 3.8% drop previously forecast by the government. Finance ministry data shows a slowdown in business spending due to supply chain woes.
Economists at SMBC Nikko Securities said Japan's economy continued to suffer a double whammy from the Delta variant and the auto industry's supply problems in the third quarter.
As Japan's economy is expected to re-accelerate its growth in October-December because of the Omicron variant, they said, while flagging the new Omicron variant could pose a downside risk to the outlook.
In October, household spending fell 0.6% from a year earlier, less than a 1.9% drop in September, the poll showed, as gradual easing of COVID 19 curbs helped consumers spend more.
The government will release the revised third quarter GDP data on December 8 at 8: 50 a.m. local time Dec. 7 at 2350 GMT and announce household spending data on December 7 at 8: 30 a.m. Dec. 7 at 8: 30 a.m. Dec. 9 at 2350 GMT. Wholesale inflation is expected to increase further to a new 40 year high. The corporate goods price index was expected to increase 8.5% in November from a year earlier in the year, after rising 8.0% in October.