Companies’ capital spending rose 16.6 percent in the April-June quarter on an all-industry basis from a year earlier, marking the sharpest expansion since comparative data became available in July-September 2002, according to a Finance Ministry survey released Monday.
Nonmanufacturers spent 17.9 percent more on plant and equipment costs than they did a year earlier, also posting the sharpest-ever increase, while manufacturers spent 14.1 percent more, the quarterly survey showed.
Corporate investment excluding financial and insurance companies marked the 13th consecutive year-on-year quarterly expansion, underlining its role as a major force behind the private demand-led economic recovery.
Combined corporate pretax profits for the three-month period, meanwhile, rose 10.1 percent, up from a 4.1 percent gain the preceding quarter.
Economists hailed the upbeat headline reading, which outpaced a 13.9 percent rise in the January-March period. But they said that may not translate to an improvement in the nation’s revised gross domestic product figure, which is due out Sept. 11.
“It was a very positive figure. We expect it to lift capital spending growth in the GDP data to 4.1 percent to 4.2 percent from a preliminary 3.8 percent,” said Naoki Iizuka, chief economist at Dai-ichi Life Research Institute Inc.
“However, the expected downward revision in public investment and upward revision in imports, along with uncertainty in inventory data, could offset this positive development in capital spending,” Iizuka said.
The economy grew a real 0.2 percent, or an annualized 0.8 percent, in the April-June period for the sixth consecutive quarterly expansion, the Cabinet Office said in a preliminary report Aug. 11.
Looking ahead, Iizuka predicted that despite uncertainty over high oil prices and a slowdown in the U.S. economy, the economic recovery here will continue in a more stable fashion, leading companies to boost investment and employment. But he cautioned that capital spending by smaller companies may lose steam later this year.
According to the survey, spending by information and technology equipment manufacturers jumped 33.8 percent, while service companies such as leasing firms increased capital outlays by 11.4 percent.
Corporate investment on an all-industry basis marked the 13th straight year-on-year quarterly expansion, while pretax profits grew for the 16th straight quarter, underlining the sustained expansion led by private demand.
Capital spending by companies capitalized at 1 billion yen or more climbed 10.4 percent in the reporting period, down from a 13 percent increase the previous quarter.
Spending by companies capitalized between 100 million yen and 1 billion yen grew 20.4 percent, up from a 19.4 percent growth.
Investment by companies capitalized between 10 million yen and 100 million yen rose 28.5 percent, up from a 13.1 percent expansion.
Manufacturers’ pretax profits rose 11.4 percent in the reporting quarter, up for the 16th straight quarter, while those of nonmanufacturers climbed 9.1 percent, up for the 13th consecutive quarter.
Pretax profits by companies capitalized at 1 billion yen or more expanded by 17.8 percent, down from 19 percent growth the preceding quarter.
Profits of companies capitalized between 100 million yen and 1 billion yen climbed 21.9 percent, reversing a 6.7 percent fall, indicating that the economic recovery has begun to spill over to smaller companies.
Profits at companies capitalized between 10 million yen and 100 million yen fell 6.5 percent year on year, but an improvement from a 7.5 percent contraction in the previous quarter.
Combined sales on an all-industry basis rose 8.6 percent, marking the 13th straight quarterly increase.
Sales of manufacturers climbed 5.7 percent, up for the 15th straight quarter, and those of nonmanufacturers expanded 10 percent, up for the 13th straight quarter.
The Finance Ministry polled 25,373 companies at random from among those capitalized at 10 million yen or more, of which 78.0 percent responded. The survey excluded financial and insurance companies.
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