Japanese companies raised spending on factories and equipment in the July-September quarter, but the slow pace of increase casts some doubt on the strength of capital spending that is needed to help sustain economic growth.
The 1.5 percent year-on-year rise in capital spending followed a flat reading in the prior quarter and marked the first gain in four quarters, Ministry of Finance data showed on Monday, but the result disappointed some economists who were expecting stronger gains.
The reading suggests that Japan’s gross domestic product growth for July-September is likely to be little changed, after preliminary data showed a 0.5 percent expansion from the previous quarter, or an annualized rate of 1.9 percent.
The capital spending data will be used to calculate revised third-quarter GDP data, which is scheduled for release at 8:50 a.m. on December 9 (2350 GMT December 8).
“There is not likely to be much change to GDP data,” said Shuji Tonouchi, a senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.
“There are some worrying signs, as capital expenditure in the services sector is losing some momentum.”
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