Capital spending by Japanese companies rose in the July-September quarter, logging six straight periods of growth and signaling that the April 1 consumption tax hike had little impact on their eagerness to invest, the government said Monday.
Business investment by all nonfinancial sectors for purposes such as building plants and introducing new equipment in the three-month period gained 5.5 percent from a year earlier to ¥9.44 trillion, after growing 3.0 percent in the previous quarter, the Finance Ministry said.
On a quarter-on-quarter basis, business investment, excluding spending on software, climbed a seasonally adjusted 3.1 percent from April-June, up for the first time in two quarters, the ministry said, raising the possibility that Japan’s economic growth figures will be upgraded.
Monday’s data will affect revisions to the gross domestic product data for July-September, scheduled to be released by the Cabinet Office on Dec. 8.
Capital spending, accounting for around 15 percent of GDP, is expected to be upwardly revised to a 0.9 percent rise from a 0.2 percent slide, said Takeshi Minami, chief economist at the Norinchukin Research Institute.
As a result, real GDP is likely to be upgraded to an annualized real 0.4 percent drop instead of a 1.6 percent drop, Minami added.
Koya Miyamae, senior economist at SMBC Nikko Securities Inc., said real GDP may have expanded in the third quarter of 2014.
A preliminary GDP report released Nov. 17 said the economy shrank for the second consecutive quarter in the three months through September, following a 7.3 percent plunge in the April-June period, in the wake of the 3-point consumption tax hike to 8 percent.
From July through September, capital spending by manufacturers rose 10.8 percent on year to ¥3.44 trillion after a 0.8 percent drop in the April-June quarter, while nonmanufacturers posted a 2.7 percent rise to ¥5.99 trillion, up for the sixth straight quarter.
By sector, the real estate industry increased its investment to develop commercial facilities and office buildings, while the service sector, including hotels, beefed up spending to boost the number of guest rooms, a Finance Ministry official said.
The official said the first stage of the tax hike made some industries unwilling to strengthen investment and construction with the economy weakening, but the corporate sector remains healthy and Japan’s economy is on a “moderate recovery track.”
In the third quarter, sales by businesses in all sectors covered in the poll rose 2.9 percent to ¥328.06 trillion, and pretax profit was up 7.6 percent to ¥13.97 trillion.
During the same period, the U.S. dollar jumped ¥4.91 from a year before to ¥103.84 on an average basis, the official said.
A falling yen supports exports by making Japanese products cheaper abroad and boosts overseas revenue in yen terms.