Japan’s Capital Spending Jumps 7.4% Before Tax Hike

Capital spending by Japanese companies jumped 7.4 percent from a year earlier in the January-March period, marking the sharpest rise in nearly two years, as the corporate sector beefed up investment ahead of the first consumption tax hike in 17 years, the government said Monday.

Business investment by all nonfinancial sectors for purposes such as building plants and introducing new equipment gained for the fourth straight quarter in the three months through March to 12.23 trillion yen, the Finance Ministry said.

Capital spending grew at its fastest pace since the April-June period in 2012, one year after the nation’s economy plunged in the wake of the March 2011 devastating quake-tsunami disaster and the ensuing nuclear accident at the Fukushima Daiichi power plant.

The results suggested the Japanese economy “has been recovering moderately,” a ministry official said, adding that it is expected to face a temporary downturn following the tax change but may rebound soon as the negative impact of the tax hike wanes.

On a quarter-on-quarter basis, business investment, excluding investment in software, climbed a seasonally adjusted 3.1 percent from the October-December period, up for the fourth consecutive quarter, the ministry said.

Following the readings, the government will revise gross domestic product data for the same period and release it on June 9.

via Mainichi

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza