📈 69% of S&P 500 stocks beating the index - a historic record! Pick the best ones with AI.See top stocks

Japan's Q1 capex rises, suggesting upward revision to poor GDP

Published 06/02/2024, 08:31 PM
Updated 06/02/2024, 10:15 PM
© Reuters. FILE PHOTO: A general view with Tokyo Tower is pictured in Tokyo, Japan March 12, 2020. REUTERS/Hannibal Hanschke/File Photo

By Tetsushi Kajimoto

TOKYO (Reuters) -Japanese companies raised spending on plant and equipment in January-March, helped by demand for automobiles and labour-saving investment and suggesting the economic decline in the first quarter may not be as severe as initially reported.

The data also points to a pickup in private sector-led growth, which is a prerequisite for the central bank to proceed with normalising monetary policy after it raised interest rates in March for the first time since 2007.

Japanese corporate capital spending rose 6.8% in January-March from the same period from a year earlier, Ministry of Finance data showed on Monday.

That represented the 12th straight quarter of gains, although the pace slowed from the previous quarter's 16.4% and it fell 4.2% on a seasonally adjusted quarterly basis, showing momentum is patchy.

The data will be used to calculate revised gross domestic product figures due on June 10. Preliminary GDP data showed Japan's economy contracted 2.0% annualised in the first quarter.

"Capex is not that strong although it will gradually be picking up in the coming months backed by domestic demand rather than uncertain global outlook," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"Taken together with public works investment and increase in inventories, this capex data will probably contribute to upward revision to a contraction of 1.8% annualised."

The preliminary GDP print published last month showed the capex component was a drag on growth in the first quarter.

The solid first-quarter capex data on Monday could bolster the case for the central bank to proceed with normalising monetary policy over time, some analysts say.

© Reuters. FILE PHOTO: A general view with Tokyo Tower is pictured in Tokyo, Japan March 12, 2020. REUTERS/Hannibal Hanschke/File Photo

Monday's MOF capex data also showed corporate sales rose 2.3% in the first quarter from a year earlier, and recurring profits increased 15.1%.

The value of corporate profits came to 27.4 trillion yen in the first quarter, the third-largest on record due to an increase in demand for cars, chemicals, and real-estate investment and other services.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.