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
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