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

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