Japan’s corporate profits in the January to March quarter posted the largest fall since 2009, affected by the new coronavirus pandemic that has ripped through the global economy, government data showed Monday.
Pretax profits of domestic companies covered in the ministry’s quarterly survey plunged 32.0 percent to ¥15.14 trillion ($140 billion) from a year earlier, the sharpest drop since a 32.4 percent fall in the July to September period in 2009 in the aftermath of the global financial crisis, according to the Finance Ministry.
Profits were down for the fourth consecutive quarter, the ministry said.
Among manufacturers, the transportation equipment sector including the auto-related industry was the worst performer in terms of profit decreases, with the pandemic denting global demand, a ministry official told reporters.
In the nonmanufacturing sector, the service sector such as accommodation led the decline as people refrained from nonessential outings amid the virus spread.
The official said the significant decrease in corporate profits reflected “the severe trend of the entire economy” due to the virus pandemic, adding, “We’ll keep monitoring its influence closely.”
Corporate sales in Japan sank 3.5 percent from the previous year to ¥359.56 trillion, falling for the third successive quarter, while those of manufacturers grew 2.9 percent, helped by increased demand for industrial machinery.
Although the virus outbreak clouded the prospects for the economy, capital spending by all nonfinancial sectors for purposes such as building factories as well as adding equipment and software rose 4.3 percent to ¥16.35 trillion, following a 3.5 percent drop in the previous period.
Investments by electric utilities in additional safety measures at their nuclear power plants contributed to the increase, the official said. On a quarter-on-quarter basis, seasonally adjusted capital expenditure climbed 6.7 percent for the first time in three quarters.
The Cabinet Office is scheduled to release revised gross domestic product data for the January-March quarter on June 8, taking into account the latest capital spending figures.
Preliminary data showed the world’s third-largest economy shrank an annualized real 3.4 percent in the three-month period due to the coronavirus pandemic, a significant contraction for the second consecutive quarter that pushed the country into a so-called technical recession.
Japan’s GDP is widely expected to post a 20 percent contraction in annualized terms in the April to June period from the previous quarter, but to rebound to some extent in July to September.
The ministry surveyed 31,540 companies capitalized at ¥10 million or more, of which 19,636, or 62.3 percent, responded.
Since the response rate dropped more than 10 points from the previous quarter, apparently due to the virus pandemic, the official said the ministry will collect data from companies that were unable to reply in time and release the revised figures in late July.
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