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Qatar Tribune
2 days ago
- Business
- Qatar Tribune
Japan's capital spending in Jan-March rises 6.4% on year
Agencies Capital spending by Japanese companies in the three months through March rose 6.4 percent from a year earlier, rising for the first time in two quarters, reflecting robust investment to boost production capacity and advance digitalization, the Finance Ministry said Monday. Investment by all nonfinancial sectors for purposes such as building factories and adding equipment reached 18.80 trillion yen, marking the highest level since comparable data became available in 2001. Spending climbed 4.2 percent among manufacturers, supported by food and steel producers seeking to expand production, and by 7.6 percent among nonmanufacturers, led by the information and communications sector amid a drive to build digital infrastructure. Pretax profits increased 3.8 percent to 28.47 trillion yen in the first quarter of 2025, up for the second straight quarter, helped by the construction and real estate sectors. Sales also rose 4.3 percent to a record 404.23 trillion yen, marking the 16th consecutive quarterly gain, driven by transport equipment, including automakers, as well as wholesalers and retailers such as trading houses. The results reflected a 'moderate recovery' of the economy, a ministry official said, while adding, 'It is necessary to closely monitor corporate developments, including downside risks from U.S. trade policies and the impact of rising prices.' U.S. President Donald Trump has imposed higher import tariffs, including on steel and aluminum in March and on automobiles in April, that could deal a heavy blow to Japanese companies. Despite the government's optimistic view, Takeshi Minami, chief economist at the Norinchukin Research Institute, said pretax profits appeared to have nearly peaked, noting the decline from the previous quarter due partly to ballooning costs including personnel expenses. Minami also said corporate sentiment could be negatively affected in the April-June period amid uncertainty over U.S. trade policies. The latest survey will be used to revise Japan's gross domestic product data for the January-March period, which showed the economy shrank an annualized real 0.7 percent, the first contraction in four quarters. The preliminary GDP data released last month showed a 1.4 percent rise in capital investment, a key component of growth, in the quarter.
Japan Today
3 days ago
- Business
- Japan Today
Japan's capital spending in Jan-March rises 6.4% on year
Capital spending by Japanese companies in the three months through March rose 6.4 percent from a year earlier, rising for the first time in two quarters, reflecting robust investment to boost production capacity and advance digitalization, the Finance Ministry said Monday. Investment by all nonfinancial sectors for purposes such as building factories and adding equipment reached 18.80 trillion yen, marking the highest level since comparable data became available in 2001. Spending climbed 4.2 percent among manufacturers, supported by food and steel producers seeking to expand production, and by 7.6 percent among nonmanufacturers, led by the information and communications sector amid a drive to build digital infrastructure. Pretax profits increased 3.8 percent to 28.47 trillion yen in the first quarter of 2025, up for the second straight quarter, helped by the construction and real estate sectors. Sales also rose 4.3 percent to a record 404.23 trillion yen, marking the 16th consecutive quarterly gain, driven by transport equipment, including automakers, as well as wholesalers and retailers such as trading houses. The results reflected a "moderate recovery" of the economy, a ministry official said, while adding, "It is necessary to closely monitor corporate developments, including downside risks from U.S. trade policies and the impact of rising prices." U.S. President Donald Trump has imposed higher import tariffs, including on steel and aluminum in March and on automobiles in April, that could deal a heavy blow to Japanese companies. Despite the government's optimistic view, Takeshi Minami, chief economist at the Norinchukin Research Institute, said pretax profits appeared to have nearly peaked, noting the decline from the previous quarter due partly to ballooning costs including personnel expenses. Minami also said corporate sentiment could be negatively affected in the April-June period amid uncertainty over U.S. trade policies. The latest survey will be used to revise Japan's gross domestic product data for the January-March period, which showed the economy shrank an annualized real 0.7 percent, the first contraction in four quarters. The preliminary GDP data released last month showed a 1.4 percent rise in capital investment, a key component of growth, in the quarter. The Cabinet Office will release the revised growth data on Monday next week. For the reporting period, the ministry surveyed 26,369 companies capitalized at 10 million yen or more, excluding those in the banking and insurance sectors, of which 18,775, or 71.2 percent, responded. © KYODO
Yahoo
3 days ago
- Business
- Yahoo
Japan Q1 capital spending hits record but some export sectors weak
By Makiko Yamazaki TOKYO (Reuters) -Investment by Japanese companies in plants and equipment surged to a record in the first quarter led by industries focused on domestic demand, but key export sectors reduced spending in a sign that U.S. tariffs are undermining business confidence. Capital spending in January-March grew 6.4% to 18.8 trillion yen ($130 billion), according to finance ministry data on Monday. The previous record had been set in 2007. But business investment has been patchy, dipping 0.2% in the previous quarter to mark the first fall in nearly four years. On a seasonally adjusted basis, capital spending rose 1.6% during the quarter. "Capital expenditure has been driven by those sectors benefiting from strong domestic sales thanks to price hikes or inbound tourism such as hotel construction," said Takeshi Minami, chief economist at Norinchukin Research Institute. Spending for the food sector climbed 13% while the real estate sector increased spending by 11%. Tellingly, however, spending by the auto sector fell 1.4% and spending by makers of factory equipment dropped 4.1%. "After Trump's election victory in November, the tariff threat has turned some of those companies cautious about fresh investment," Minami said. The data is unlikely to have a significant impact on revised gross domestic product figures due on June 9, he added. Preliminary GDP data last month showed Japan's economy shrank by an annualised 0.7% in the first quarter, contracting for the first time in a year due to stagnant consumer spending and falling exports. Capital expenditure, a key gauge of domestic demand-led economic growth, has been generally strong in recent years as companies spent on information technology to offset a chronic labour crunch arising from the country's fast-ageing population. The brisk spending has been backed by rising corporate profits. Monday's data showed corporate sales rose 4.3% in the first quarter from a year earlier, and recurring profits increased 3.8%. U.S. tariffs, however, threaten car makers and other export-oriented Japanese firms which form the backbone of the economy. Trump imposed 10% tariffs on most imports into the United States and has also imposed 25% levies on cars, steel and aluminium. Japan also faces a 24% tariff rate starting in July unless it can negotiate a deal with Trump. According to an estimate by the Japan Research Institute, if all the threatened tariff measures against Japan were take effect, U.S.-bound exports will fall by up to 6 trillion yen a year, squeezing corporate profits by up to 25%. That would slow wage growth at manufacturers to 2-2.4% in 2026 from an increase of around 3% currently, the institute said in a report last week. That would in turn weaken the Bank of Japan's working assumption that sustained wage gains will spur domestic demand and justify raising interest rates further. ($1 = 143.68 yen)
Japan Times
3 days ago
- Business
- Japan Times
Japan's firms raised capital spending ahead of U.S. tariffs
Japanese businesses increased capital investment at a faster pace in the first quarter of this year just as U.S. President Donald Trump's administration touted the coming tariff campaign that kicked off in March. Capital expenditure on goods excluding software gained 1.8% in the three months through March from the previous quarter, when such outlays rose by 1.3%, the Finance Ministry reported Monday. The reading compares with a 1.4% gain in corporate investment reported in the preliminary reading of Japan's gross domestic product. The latest data will be factored into a revised GDP report due for release on June 9. Compared with a year ago, investment including software increased 6.4%, beating the median estimate of a 3.8% gain. Profits rose 3.8% from a year earlier and sales advanced 4.3%. Business spending holds the key to the country's economic growth as inflation keeps a lid on household spending and Trump's tariff campaign clouds the trade outlook. The data will be used to revise the first quarter GDP report after the preliminary reading showed a contraction driven by weak trade figures and stalling consumption. "There will be little impact on the revised GDP figures,' said Takeshi Minami, chief economist at Norinchukin Research Institute. "I think the GDP results will remain negative, as consumption continues to struggle and the tariffs hit exports. I expect negative growth to continue in the April-June period.' The value of sales and capital investment both reached record levels, with food and steel companies increasing outlays to boost production capacity, a ministry official said. The tariffs are expected to dent exporters' competitiveness and may reduce their willingness to invest in facilities and raise wages. A 25% tariff on steel and aluminum took effect in March, followed by the assessment of a levy at the same rate on autos and a 10% across-the-board tax starting in April. The across-the-board duty will rise to 24% in early July, barring a trade deal. "I think capital investment in machinery is slowing down,' Minami said. "The impact of tariffs will become clearer in the April-June period, so I don't think we will see an improvement in capital investment figures.' Japan's biggest carmakers are likely to take a hit of more than $19 billion from the tariffs as they are heavily reliant on the U.S. market. Toyota, the world's biggest carmaker, will probably sustain the worst hit. Monday's data come as the government steps up a campaign to encourage corporate investment. An expert panel of the Ministry of Economy, Trade and Industry recommended that when companies have excess funds on hand, they channel the money into capital investment rather than share buybacks, according to an interim report. The Bank of Japan on May 1 said the slowdown in overseas economies is likely to weigh on exports and production, causing business investment to decelerate. It said that companies are expected to maintain investment to cope with labor shortages and to enhance digitalization and decarbonization. Japan continues to seek reprieves from the U.S. tariffs while the United Kingdom reached a deal and China agreed upon a tariff truce with Trump. Japan's top trade negotiator Ryosei Akazawa said over the weekend that the latest round of discussions with the Trump administration has put the two nations on track for a deal as early as this month. Akazawa may return to the United States this week, according to NHK. At home, Prime Minister Shigeru Ishiba's government approved an emergency measure last week to help businesses and households deal with the impact of the tariffs.
CNA
3 days ago
- Business
- CNA
Japan Q1 capital spending hits record but some export sectors weak
TOKYO :Investment by Japanese companies in plants and equipment surged to a record in the first quarter led by industries focused on domestic demand, but key export sectors reduced spending in a sign that U.S. tariffs are undermining business confidence. Capital spending in January-March grew 6.4 per cent to 18.8 trillion yen ($130 billion), according to finance ministry data on Monday. The previous record had been set in 2007. But business investment has been patchy, dipping 0.2 per cent in the previous quarter to mark the first fall in nearly four years. On a seasonally adjusted basis, capital spending rose 1.6 per cent during the quarter. "Capital expenditure has been driven by those sectors benefiting from strong domestic sales thanks to price hikes or inbound tourism such as hotel construction," said Takeshi Minami, chief economist at Norinchukin Research Institute. Spending for the food sector climbed 13 per cent while the real estate sector increased spending by 11 per cent. Tellingly, however, spending by the auto sector fell 1.4 per cent and spending by makers of factory equipment dropped 4.1 per cent. "After Trump's election victory in November, the tariff threat has turned some of those companies cautious about fresh investment," Minami said. The data is unlikely to have a significant impact on revised gross domestic product figures due on June 9, he added. Preliminary GDP data last month showed Japan's economy shrank by an annualised 0.7 per cent in the first quarter, contracting for the first time in a year due to stagnant consumer spending and falling exports. Capital expenditure, a key gauge of domestic demand-led economic growth, has been generally strong in recent years as companies spent on information technology to offset a chronic labour crunch arising from the country's fast-ageing population. The brisk spending has been backed by rising corporate profits. Monday's data showed corporate sales rose 4.3 per cent in the first quarter from a year earlier, and recurring profits increased 3.8 per cent. U.S. tariffs, however, threaten car makers and other export-oriented Japanese firms which form the backbone of the economy. Trump imposed 10 per cent tariffs on most imports into the United States and has also imposed 25 per cent levies on cars, steel and aluminium. Japan also faces a 24 per cent tariff rate starting in July unless it can negotiate a deal with Trump. According to an estimate by the Japan Research Institute, if all the threatened tariff measures against Japan were take effect, U.S.-bound exports will fall by up to 6 trillion yen a year, squeezing corporate profits by up to 25 per cent. That would slow wage growth at manufacturers to 2-2.4 per cent in 2026 from an increase of around 3 per cent currently, the institute said in a report last week. That would in turn weaken the Bank of Japan's working assumption that sustained wage gains will spur domestic demand and justify raising interest rates further. ($1 = 143.68 yen)
