Japan’s Capital Spending Jumps 16.4% In Q4 Of 2023

Capital spending by Japanese companies surged 16.4% in the October-December quarter from a year earlier, the Finance Ministry said, indicating that the state of the Japanese economy may not be as bleak as initially thought, Kyodo News reported.

Investment by all nonfinancial sectors for purposes such as building factories and adding equipment totaled 14.48 trillion yen ($96 billion).

Investment by all nonfinancial sectors for purposes such as building factories and adding equipment totaled 14.48 trillion yen ($96 billion), a record for the quarter. Japanese companies increased investment for the 11th straight quarter, a sign of the underlying strength of domestic demand.

Economists are keeping tabs on whether the bullish capital spending plans for the current fiscal year ending March translate into actual spending, Mainichi Japan also reported.

The latest data will be used to revise Japan's gross domestic product (GDP) for the final quarter of 2023.

The economy unexpectedly contracted for the second straight quarter, slipping into a technical recession amid weak spending by both consumers and businesses. "

The GDP data will be revised upward, showing that Japan averted a technical recession. That being the case, production cuts in the auto sector will likely hurt growth in the January-March quarter," said Yoshimasa Maruyama, chief economist at SMBC Nikko Securities Inc.

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