Capital spending by companies in all industries dropped 15.5 percent in the April-June quarter from the previous year, marking the third consecutive quarterly decline, the Finance Ministry reported Thursday.
The drop in spending was registered on the back of a continued slump in demand for information-technology products and followed a decline of 16.8 percent in the January-March quarter, the ministry said.
Investment in equipment and plants by manufacturers dropped 23.7 percent year-on-year for the fourth consecutive drop, according to a quarterly survey.
The decline was conspicuous among manufacturers of general and electronic machinery, a ministry official said.
Capital spending by nonmanufacturers fell 10.9 percent in the quarter from a year before to 5.27 trillion yen, led by a drop in the construction, wholesale and retail sectors.
“Although a sign of (economic) recovery was seen in exports and production in the April-June quarter, capital investment remains severe,” the official said. “The impact of stagnancy in the information technology sector remains.”
The figures on corporate spending are used to help calculate a revised gross domestic product figure for the April-June quarter, to be released Wednesday.
Combined sales in the April-June quarter dropped a record 9.2 percent from the previous year to 288.91 trillion yen, marking the fourth consecutive quarterly drop.
The scope of the decline was the largest on record. The ministry began carrying out the comparable surveys in fiscal 1955.
Sales by manufacturers fell 6 percent in the quarter from the previous year to 87.1 trillion yen, marking the fifth straight quarter of decline, the survey says.
Sales by nonmanufacturers registered a record 10.5 percent fall to 201.82 trillion yen. Many sectors, including construction, wholesale and retail, suffered.
Combined pretax profits fell 16.8 percent to 7.65 trillion yen, the fourth consecutive quarterly decline.
Pretax profits by manufactures fell 12.6 percent to 2.64 trillion yen, the fifth consecutive quarterly drop, while pretax profits by nonmanufacturers declined 18.8 percent to 5.01 trillion yen, marking the first decline in two quarters.
The survey questions were sent to 25,009 randomly selected companies with capitalization of 10 million yen or more, excluding financial and insurance firms, and the response rate was 77 percent.
The ministry said capital spending in fiscal 2001, which ended March 31, declined 6.2 percent from the previous year to 36.5 trillion yen, the first decline in two years.
Combined sales fell a record 6.7 percent to 1.34 quadrillion yen, the first drop in three years. Pretax profits fell 21.2 percent to 28.25 trillion yen, also the first drop in three years.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.