Corporate Japan Capital Spending Up for 1st Time in 3 Quarters

Capital spending by Japanese firms rose for the first time in three quarters in the April-June period, as the yen’s slide and policy effects have shored up the economy and prompted the corporate sector to beef up investment, the government said Monday.

Companies’ higher spending to build plants and introduce new equipment suggests a brighter outlook for the world’s third-largest economy, and could push Prime Minister Shinzo Abe toward carrying out a planned sales tax hike next year, analysts said.

Business investment by all nonfinancial sectors gained 0.02 percent from a year earlier to 8.31 trillion yen ($84.29 billion) in the three months through June, following a 3.9 percent fall in the previous quarter, the Finance Ministry said.

In the October-December period last year, capital spending plunged 8.7 percent due in part to the stronger yen against a backdrop of lingering concern over the eurozone debt crisis.

But the pace of deterioration in business investment had slowed after Abe’s policies dubbed “Abenomics,” centering on drastic monetary easing and massive fiscal spending, drove down the Japanese currency and helped exports bounce back.

via Mainichi

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