Companies in the January-March quarter suffered their largest sales dip since the economic downturn triggered by the 2011 earthquake and tsunami, according to revised data released Monday by the Finance Ministry as the coronavirus pandemic hit more businesses than previously estimated.
Sales across all industrial sectors dropped 7.5 percent to ¥344.59 trillion, revised downward from a 3.5 percent decline in the preliminary data released in June. It was the steepest quarterly fall since the 11.6 percent tumble in April-June 2011, when corporate activities deteriorated after the Great East Japan Earthquake and subsequent disasters devastated the Tohoku region, the ministry said.
The ministry released the revised figures after collecting data from companies that were unable to reply in time when the preliminary report was being compiled. The initial response rate dropped over 10 points from the previous quarter, apparently due to the pandemic.
Pretax profit was revised to a 28.4 percent decline to ¥15.93 trillion, from 32.0 percent reported in June. It was still the biggest drop since the July-September quarter of 2009, when pretax profit plunged 32.4 percent.
Capital spending was revised downward to an increase of 0.1 percent from growth of 4.3 percent in the initial survey, affected by the pandemic but managing to maintain a level close to that of a year earlier.
Investment by all nonfinancial sectors for purposes such as building factories and adding equipment totaled ¥15.69 trillion, down from ¥16.35 trillion in the preliminary data, according to the Finance Ministry.
Capital spending by manufacturers fell 5.3 percent to ¥4.98 trillion, revised downward from the initial estimate for a 0.6 percent increase, while growth in nonmanufacturer investment was cut to 2.9 percent at ¥10.72 trillion, down from 6.2 percent.
The overall increase of investment followed a 3.5 percent drop the previous quarter.
Among nonmanufacturers, capital spending by real estate firms increased 28.2 percent, revised upward from 20.5 percent, making up for the weakness in the manufacturing sector.
On a quarter-on-quarter basis, seasonally adjusted capital expenditure climbed 3.6 percent, revised from the preliminary reading of 6.7 percent growth but logging the first increase in three quarters.
“Generally, many corporate investments are made for long-run projects so changes in the investment numbers tend to be slower than those of sales and profits,” a ministry official told reporters.
The ministry surveyed 31,528 companies capitalized at ¥10 million or more. Among them, 22,384, or 71.0 percent, responded, up from 19,636, or 62.3 percent, in the preliminary survey.
Taking into account the latest capital spending figures, the Cabinet Office is scheduled to release another revision of gross domestic product data for the January-March period on Aug. 3. In June, the office revised upward the quarter’s GDP to an annualized real contraction of 2.2 percent from a 3.4 percent contraction in the preliminary data.
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