A strong business outlook has translated into a 19.8 percent year-on-year rise in fiscal 2004 spending forecasts for manufacturers, according to a government survey released Thursday.
In contrast to manufacturers, nonmanufacturers remained cautious, predicting capital expenditures would grow 0.3 percent from the previous year.
The result was that the forecast for all companies was 6.4 percent growth in spending.
Policymakers pay close attention to capital expenditure forecasts, which spread the fruits of business profits to different industries and individuals.
But companies exhibited caution about spending from October through March. While April-September forecasts would mean an 11.4 percent jump in spending, the second fiscal-half spending forecasts showed only a 2 percent rise.
The survey, for the first time combining two polls, from the Finance Ministry and the Cabinet Office, was conducted a month ago.
The strongest forecast for capital spending was among manufacturers in a category marked "others," which includes chemical, information communications equipment and plastics industries, raising forecast spending among manufacturers to 12.26 trillion yen. The "others" category received a boost from healthy sales of home electronics products.
On business confidence, 22.5 percent of large companies capitalized at more than 1 billion yen said their own business conditions were improving, while 15.3 percent said the opposite, for a diffusion index of 7.2.
Although not directly comparable with the results of the Finance Ministry's previous survey, the index at large companies in the April-June quarter was up 2.1 points from the previous quarter and that at midsize companies was up 0.1 point.
But the index at small companies was down 4.7 points, indicating the nation's economic recovery has yet to spread to smaller firms.