April-June capital spending by the nation’s firms up 7.7%

Kyodo

Corporate capital spending grew 7.7 percent in the April-June quarter over the previous year amid robust demand for cars and parts bolstered by government stimulus measures, the Finance Ministry said Monday.

It was the third consecutive quarter of growth.

Business investment by all industries excluding financial and insurance firms for such purposes as building new plants and installing new equipment totaled ¥8.31 trillion in the quarter.

Sales fell 1.0 percent to ¥313.30 trillion for the first decline in two quarters, while pretax profit rose 11.5 percent to ¥12.65 trillion for the second straight quarter of growth.

In addition to government subsidies for purchasing eco-friendly vehicles, reconstruction from the devastating March 2011 quake and tsunami bolstered domestic demand, a ministry official said.

Still, the official remained cautious about future prospects.

“We need to pay attention to the risks our country’s economy is facing . . . amid great uncertainty over the situation of the eurozone debt crisis,” the official said.

The ministry polled 31,558 companies capitalized at ¥10 million or more, of which 22,720, or 72.0 percent, responded.

The spending data normally affect revisions to economic growth. The Cabinet Office will release the revised GDP figures for the quarter on Sept. 10, taking into account Monday’s capital spending and inventory figures.

The government may revise GDP downward, Yasunari Ueno, chief market economist at Mizuho Securities Co., said in a report, noting that investment, excluding spending on software, fell 0.5 percent from the previous quarter on a seasonally adjusted basis.

The preliminary GDP data released last month showed that the economy grew an annualized real 1.4 percent from the previous quarter. It was sharply lower than the revised 5.5 percent growth recorded in the first quarter, casting a shadow over prospects for a recovery from last year’s natural disasters.

Spending by manufacturers gained 14.7 percent from a year earlier to ¥3.14 trillion, led by metal product makers that saw a need to invest in facilities for car parts.

Nonmanufacturers, meanwhile, registered 3.9 percent growth to ¥5.17 trillion, as the information and communications sector increased spending on infrastructure for smartphones.