TOKYO :Japanese corporate spending on plants and equipment rose 6.4 per cent year-on-year in the first quarter, Ministry of Finance data showed on Monday, showing a bright spot in the country’s patchy economic recovery amid uncertainties over global demand.
The solid expenditure data, which will be used to calculate revised gross domestic product figures due on June 9, shows at least one driver of domestic demand is solid, though U.S. President Donald Trump’s tariffs could eventually deal a blow.
Preliminary data last month showed Japan’s economy shrank by an annualised 0.7 per cent in January-March, contracting for the first time in a year due to stagnant private consumption and falling exports.
Capital spending in the quarter rebounded from the previous quarter’s 0.2 per cent decline, which represented the first quarterly fall in nearly four years, according to Monday’s finance ministry data.
It grew 1.6 per cent on a seasonally adjusted quarterly basis.
Monday’s capex data also showed corporate sales rose 4.3 per cent in the first quarter from a year earlier, and recurring profits increased 3.8 per cent.
Capital expenditure is one of the key gauges of domestic demand-led economic growth.
Business spending remained generally solid in recent years due to strong appetite for investment in information technology to offset chronic labour crunch in the fast-ageing population.
But the sweeping U.S. tariffs could weigh on profits at export-oriented Japanese firms and lead them to postpone capital investment decisions.
