• Kyodo News


Capital spending by companies totaled a record 17.729 trillion yen in the January-March period on an all-industry basis, up 13.6 percent from a year earlier and the 16th straight quarterly expansion, the Finance Ministry said Monday.

Economists said the closely watched quarterly survey suggests firms remain proactive about further business investment despite a slowdown in the U.S. economy.

Even excluding software investment, the combined capital spending posted a record-high 16.393 trillion yen, up 14.2 percent from a year before.

Combined corporate pretax profits and sales also hit record highs in the first quarter, underpinning robust performance in the corporate sector.

Combined pretax profits expanded 7.4 percent to 16.667 trillion yen from a year before for the 19th consecutive quarterly increase, matching the 19th straight quarterly growth logged in the so-called Izanagi economic boom from November 1965 to July 1970, a Finance Ministry official said.

The current economic expansion cycle that started in February 2002 has already surpassed the 57-month Izanagi boom, stretching the expansion period to the 64th month as of May.

“The result is likely to prompt the government to revise upward capital investment in the January-March gross domestic product data,” said Takehiro Sato, chief economist at Morgan Stanley Japan Ltd.

But the overall GDP in a revised report could be little changed from the preliminary 0.6 percent rise, or an annualized 2.4 percent expansion in real terms, as expected falls in inventory investment are likely to nearly offset the gain in capital investment, Sato said.

The preliminary report showed capital spending shrank a real 0.9 percent, the first drop in five quarters. The Cabinet Office is scheduled to release the revised GDP data next Monday.

According to the ministry data, manufacturers spent 12.7 percent more on plant and equipment investments than they did a year earlier for the 16th straight quarterly increase.

Nonmanufacturers spent 14.1 percent more, up for 14 quarters in a row.

Capital spending by companies capitalized at 1 billion yen or more gained 8.3 percent in the January-March period from a year before.

Spending by companies capitalized between 100 million yen and 1 billion yen climbed 12.6 percent, while those by companies capitalized between 10 million yen and 100 million yen jumped 30.4 percent.

Manufacturers’ pretax profit rose 7.2 percent, while those of nonmanufacturers increased 7.6 percent.

Pretax profits by companies capitalized at 1 billion yen or more expanded 7.0 percent and those of companies capitalized between 100 million yen and 1 billion yen rose 14.6 percent.

Pretax profits of companies capitalized between 10 million yen and 100 million yen swelled 5.3 percent.

“It appears that robust conditions in the corporate sector have continued regardless of company size,” the ministry official said.

Pretax profits by companies in the bracket for the smallest size inched up 1.2 percent in the July-September period and remained flat in the October-December quarter.

Combined sales on an all-industry basis rose 6.3 percent in the reporting quarter from a year earlier to a record 396.439 trillion yen, up for the 16th straight quarter.

Sales at manufacturers grew 2.4 percent and that of nonmanufacturers gained 8.0 percent in the reporting quarter.

The ministry poll also showed that long-term borrowing grew 10.7 percent to 246.303 trillion yen in the January-March period from a year earlier, up for the fourth straight quarter.

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