Corporate Japan Spending Down 3.9 Percent in Q1

Capital spending by Japanese firms dropped 3.9 percent from a year earlier in the first quarter of 2013, as companies remained wary of the outlook for the country’s economy despite the weaker yen and budding hopes of a recovery in exports, the government said Monday.

Business investment by all nonfinancial sectors for purposes such as building plants and introducing new equipment fell for the second straight quarter in January-March. It totaled 11.39 trillion yen ($113.39 billion) during the three months, the Finance Ministry said.

Growth in domestic demand, along with higher private capital spending, is vital for Prime Minister Shinzo Abe’s government to achieve its goal of overcoming nearly two decades of deflationary recession, analysts said.

Whether Abe’s administration can produce effective measures to encourage the corporate sector to spend more money through deregulation and structural reform in its economic growth strategy, to be finalized in mid-June, will be closely watched, they added.

On a quarter-on-quarter basis, capital spending, excluding investment in software, slid a seasonally adjusted 0.9 percent from the October-December period.

via Mainichi

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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