First, the good news. Japan’s lacklustre economy grew 0.9 per cent quarter-on-quarter in the last three months of 2007, massively trumping forecasts. Delighted investors sent the benchmark Nikkei 225 stock market index up 4.3 per cent, the highest one-day jump in six years.

Alas, there is limited cause for such euphoria. On a year-on-year basis, the economy grew 2 per cent in real terms – marginally up on the previous two quarters, but around trend levels. That, however, assumes the numbers stand. Preliminary data are notoriously unreliable. In the past 15 quarters, seven preliminary numbers have been revised down and six revised up. Other data indicate that two of the biggest growth drivers, net exports and capital expenditure, are struggling to maintain momentum. Shipments to China, Japan’s biggest market, are showing signs of a slowdown following the October peak, particularly in products such as steel and semiconductors. This may relate to raw materials and components which are sent to China purely for processing, and could hence be an early glimpse of weakness in the US. More worryingly (and not just for Japan), it could signal that demand in China itself is slowing.