Japan Corporate Expenditures Rise in Q3

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.”

via Reuters

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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