By Daniel Leussink
TOKYO (Reuters) – Japanese companies raised spending on plant and equipment for the second straight quarter in July-September, as corporate activity remained resilient to the hit from the pandemic, although the pace of gains slowed.
A slow pickup in company spending is likely to worry policymakers hoping strong domestic demand can make the country’s economic recovery more sustainable.
Ministry of Finance (MOF) data out on Wednesday showed capital expenditure in the third quarter rose 1.2% from the same period last year.
It marked the second straight quarter of year-on-year gains, having posted a larger 5.3% expansion in the second quarter.
The data, which will be used to calculate revised gross domestic products (GDP) due next Wednesday, comes after factory production grew in October, raising hopes of a recovery fuelled by stronger car output.
The world’s third-largest economy declined in the third quarter as global supply disruptions hit exports and the health crisis soured consumer sentiment.
A preliminary estimate found the economy shrank an annualised 3.0% in July-September amid a resurgence of coronavirus infections.
Wednesday’s data showed manufacturers’ business spending improved 0.9% from a year earlier, while that of service-sector firms advanced 1.4%.
Capital expenditure, however, lost 2.6% in July-September from the previous quarter on a seasonally-adjusted basis, the MOF data showed.
Corporate recurring profits rose 35.1% in July-September from a year earlier, while sales were up 4.6%.
(Reporting by Daniel Leussink; Editing by Sam Holmes)
