Corporate investment in plants and equipment rose 3.3 percent in the January-March quarter from a year earlier, marking the first year-on-year increase in more than two years.
Increased investment in the information-technology and service industries helped shore up the total figure, the Finance Ministry said in its quarterly business survey released Wednesday.
The latest figures show a general recovery trend in fixed capital investment, although it varies widely from sector to sector, a ministry official said.
The capital investment data will be incorporated into the gross domestic product figures for the January-March period, which will be released Friday. Capital investment accounts for about 17 percent of GDP.
About 18,000 randomly selected nonfinancial firms capitalized at 10 million yen or more responded to the poll.
Combined capital investment by all industries came to 12.97 trillion yen, the first rise in nine quarters.
Investment by manufacturers fell 6.1 percent for the seventh consecutive month of year-on-year decline. Investment by makers of electronic machinery, including liquid-crystal displays and semiconductors, rose 18.9 percent, but plunged to 35.9 percent for makers of nonelectric machinery.
Nonmanufacturers made a 7.7 percent increase in investment for the second straight month of increase. Service firms, such as hotels and pachinko parlors, raised investment by 32.7 percent. Transport and communications firms, however, dropped 16.5 percent, partly because investment in relay stations for mobile phones faded after a period of expansion.
By size, small businesses with less than 100 million yen in capital increased investment by 20.3 percent to mark two consecutive months of rise. Investment by large firms with capital exceeding 1 billion yen edged 1.6 percent higher for the first rise in two years.
But investment by medium-size firms fell 11.7 percent for the ninth consecutive month of decrease. This is probably because these firms have less cash than big firms and less flexibility than small ones, the official said.
The combined pretax profits of all industries in the January-March quarter expanded 38.7 percent to 10.98 trillion yen, the fifth consecutive month of rise, the survey shows. Electric machinery makers had a 59.4 percent profit surge, while service-sector firms enjoyed a jump of 76.8 percent.
Although combined sales rose a comparably negligible 2.6 percent, they marked the second straight month of year-on-year increase.
The contrast between the surge in pretax profits and the meager rise in sales was attributed to cost-reduction efforts.
Firms less upbeat
Major Japanese companies were slightly less upbeat about the outlook for the economy in the April-June quarter than they were during the previous three months, the Finance Ministry said Wednesday.
In a quarterly economic survey conducted in May, the ministry said its business sentiment index came to 4.4 for large firms on an all-industry basis, compared with a revised 5 in the January-March period.
The index figure, however, remained in plus territory for the third consecutive quarter, underscoring the recent upward trend in corporate confidence, the ministry said.
The index, which covers all business sectors except finance and insurance, represents the difference between the percentage of firms reporting improved business conditions and those reporting a deterioration.
“We think the economy is improving gently,” a ministry official said, citing the effects of various policy measures taken in recent years and the recovering Asian economies.
For midranking and small businesses, the indexes showed confidence at minus 8.2 and minus 21.3, respectively, compared with minus 9.4 and minus 23.2 for the prior term.
Major corporations are defined as those capitalized at 1 billion yen or more. Midranking firms are those with capital from 100 million yen to less than 1 billion yen, and small firms are those with capital from 10 million yen to below 100 million yen.
For big manufacturers, the index climbed to 12.0 from 10.1. The indexes for their midranking and small counterparts came to 5.4 and minus 21.7, against 1.1 and minus 21.4.
The indexes for nonmanufacturers stood at minus 0.6 for big companies, minus 12.7 for midranking corporations and minus 20.9 for small businesses, against 1.4, minus 12.9 and minus 23.6.
In the coming July-September quarter, the business sentiment index for all leading corporations is expected to be 9.3, while in the October-December period the index is forecast to rise to 11.1, the ministry said.
For midranking and smaller enterprises, the indexes are expected to be minus 1.9 and minus 14.2 in July-September, and 1.9 and minus 7.6 in the following term.
The ministry surveyed 10,441 corporations — 3,389 manufacturers and 7,052 nonmanufacturers. Replies were received from 80 percent of the companies.