Capital spending by manufacturers jumped 15 percent in the October-December quarter from a year earlier for the biggest rise in 2 1/2 years, underscoring the strong capital investment fueling the recent economic recovery, the Finance Ministry said Thursday.
Helped by the brisk spending on plants and equipment by manufacturers, capital spending on an all-industry basis rose 5.1 percent from a year earlier for the third quarterly expansion, the ministry said.
Combined sales at companies increased 3.1 percent in the October-December quarter for the third straight quarterly gain. Combined corporate pretax profits rose 16.9 percent, the sixth successive quarterly increase.
The figures are based on a survey of capital spending, excluding investment for software, by companies capitalized at 10 million yen or more. The survey covered 23,997 randomly selected companies, excluding financial institutions, and had a response rate of 79.6 percent.
The increase in capital investment was in line with the capital outlay figure for the quarter in Japan’s gross domestic product data.
The government said last month that October-December GDP expanded an annualized 7.0 percent, spurred by brisk exports and capital spending. A revised figure is scheduled to be released Wednesday.
“Given such factors as the recent weakening of the yen and strong demand in China, we can expect capital spending at Japanese manufacturers to maintain its strength,” said Shinichiro Kawasaki, an economist at Dai-ichi Life Research Institute Inc.
But Kawasaki said that whether that will lead to broad-based strength in the economy is far from certain.
“The focus at the moment is whether a recovery in the corporate sector will spread to employment,” he said. “That part is still unclear.”
The big jump in capital spending for manufacturers, which marked the third straight month of increase, was led by a 178.8 percent expansion in the publishing and printing industries and 37.4 percent growth in the transport machinery sector, which includes automobiles.
Nonmanufacturers’ capital spending rose for the first time in two quarters, up 1.1 percent, led by a 39 percent increase in the transport and communications sector.
On a seasonally adjusted basis, capital investment covering all industries rose 4.5 percent. That for manufacturers grew 7.5 percent, while it increased 3.1 percent for nonmanufacturers.
Sales by manufacturers rose for the fifth straight quarter, up 2.9 percent, while those by nonmanufacturers increased 3.2 percent, up for the third quarter in a row.
Manufacturers’ pretax profits grew 2.4 percent for the sixth straight rise. But the pace of expansion fell from the 16.3 percent in the July-September quarter.
Pretax profits of nonmanufacturers soared 29.4 percent, up for the third straight quarter.
“The increase in profits slowed at major manufacturers, which had led the rise in profits in the recent past,” the ministry official said. “But those for nonmanufacturers showed strong growth in almost all fields, indicating that brightness is spreading in the sector.”