“The capex data suggested there will be little change in revised GDP data. The economy was stalling as global cyclical demand went down,” said Yoshimasa Maruyama, chief economist at SMBC Nikko Securities. — Reuters
TOKYO: Japanese companies raised spending on plant and equipment for a seventh straight quarter through to the end of 2022, data released yesterday showed, offering relief to policymakers counting on a private demand-led recovery from Covid-19.
Finance Ministry data showed Japanese firms raised capital expenditure (capex) in October to December by 7.7% from the same period a year earlier, slowing from a 9.8% gain in the third quarter of 2022.
A boost to output capacity drove the higher capex requirements as manufacturers such as chemicals and metal products, as well as service-sector firms, prepared for an uptick in demand.
The data is used to calculate revised gross domestic product (GDP) figures due on March 9. Preliminary estimates showed Japan’s economy rebounded an annualised 0.6% in the fourth quarter.
The weaker-than-expected GDP growth was caused by a decline in capital spending, raising some doubt about whether the world’s No. 3 economy can achieve growth through private-sector investment and wage hikes which would in turn boost consumption.
Quarter-on-quarter, seasonally-adjusted capex rose 0.5%, the data showed.
“The capex data suggested there will be little change in revised GDP data. The economy was stalling as global cyclical demand went down,” said Yoshimasa Maruyama, chief economist at SMBC Nikko Securities.
“Capital spending may hold firm but lack strength until later in the coming fiscal year.”
Corporate recurring profits fell 2.8% in the final quarter, down for the first time in eight quarters, but the earnings were still the second largest on record for the fourth quarter.
Large profit declines at manufacturers such as chemicals and petroleum and coal industries due to spikes in raw material prices overwhelmed post-Covid gains at service-sector firms such as transportation.
All firms’ sales rose 6.1% in October to December from a year earlier, up for seven straight quarters, it showed. — Reuters
