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* Q2 investments 4. 6% year/year, seasonally adjusted 3. 9% qtr/qtr
* Industrial 13. 7% year/year, non-industrial stable
* Recurring profit in Q2 17. 6% year/year, sales 7. 2% year/year
* Second quarter recurring profit of 28. 3,000,000 yen, the never-recorded (adds details, analyst quotes)
By Kantaro Komiya
TOKYO, Sept. 1 (Reuters) – Japanese corporations increased spending on factories and appliances for the fifth straight quarter in April-June as the business climate remained resilient despite emerging costs, COVID lockdowns in China and supply chain disruptions.
Solid corporate spending gives some encouragement to Japan’s expansion prospects, even as the global economic slowdown and nationwide COVID-19 surges threaten to hurt demand in the short term.
“Although the capital expenditure point is not too high compared to the pre-pandemic period, companies have nevertheless begun to accumulate expenses that have been maintained for the past two years, thanks to a calm COVID-19 situation,” said Takeshi Minami, lead economist at the Norinchukin Research Institute.
Capital spending in the current quarter rose 4. 6% from the same time last year, data from the Ministry of Finance (MOF) on Thursday.
The speed of spending accelerated after a year-on-year accumulation of 3. 0% in the first 3 months of this year.
The knowledge will be used to calculate the revised gross domestic product (GDP) figures expected by September 8. An initial estimate last month showed the world’s third-largest economy grew 2. 2% in the current quarter.
Thursday’s solid knowledge may slightly boost Japan’s April-June revised GDP expansion, up to an annualized 2. 5 percent, Minami said.
Business spending through brands increased by 13. 7% over the previous year, while spending through companies in the service sector remained stable, according to MOF data.
On a seasonally adjusted quarterly basis, capital expenditure increased 3. 9% in April-June from the previous quarter, when brands and service companies increased their spending.
“Manufacturers continued to spend even amid the headwinds of electricity inflation, but non-manufacturing spending was limited, most likely because the government’s relaxed stance on COVID-19 restrictions is still unclear from April to June,” said Masato Koike, senior economist at Dai-ichi. Institute for Research on Life.
As for the outlook, utilities will accumulate investments in hopes of an additional economic reopening of COVID restrictions, while manufacturers’ spending could decline if the global outlook worsens, Koike added.
Japan’s production activity grew at its slowest rate in 11 months in August, according to separate sector data released on Thursday.
MOF data showed recurring corporate profit rose 17. 6% in the current quarter from a year earlier to 28. 3 trillion yen ($203 billion), the biggest quarterly profit since records began in 1954. Sales increased by 7. 2%.
Japanese reported recurring earnings of 83. 9 trillion yen for the fiscal year that ended in March, also a record, the Finance Ministry said.
The yen’s fall has hurt corporate profits, a Finance Ministry official told reporters, saying exporters are still raising prices for uncooked fabrics imported for corporations operating in Japan.