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Japan Capital Spending Gains More Than Forecast Last Quarter

Japan’s industrial production increased 1.8 percent in October from the previous month. Photographer: Kiyoshi Ota/Bloomberg
Japan’s industrial production increased 1.8 percent in October from the previous month. Photographer: Kiyoshi Ota/Bloomberg

Dec. 3 (Bloomberg) -- Japanese companies increased capital spending more than economists predicted in the three months to September, indicating a contraction in the world’s third-largest economy may be short-lived.

Capital spending excluding software rose 2.4 percent in the period from a year earlier, after rising 6.6 percent in the previous quarter, the Ministry of Finance said in Tokyo today. Economists surveyed by Bloomberg had forecast a 1 percent gain.

A government report last week showed October production unexpectedly rose the most in 10 months, signaling some resilience in an economy hurt by declines in exports and domestic consumption. The government will use today’s report to revise preliminary gross domestic product data that showed an annualized 3.5 percent contraction in the third quarter.

“There’s a possibility that the GDP figure may be revised up slightly,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. and a former BOJ official. “However, the picture won’t change. Japan’s economy will probably shrink in the fourth quarter,” as global growth has slowed and domestic demand has weakened, she said.

The yen was little changed after the report. As of 10:32 a.m. in Tokyo the currency was 0.1 percent higher at 82.43 per dollar. The Nikkei 225 Stock Average was 0.5 percent higher, heading for its seventh advance in eight trading days.

Companies in the transport equipment, food and chemicals industries contributed to the advance in capital expenditure in the quarter, the ministry said after the data were released.

Japan’s industrial production increased 1.8 percent in October from the previous month. The increase was driven by output of electronic parts for devices, including smartphone displays and memory chips for export to Asia, the trade ministry said.

“Though we can’t be sure yet whether the economy’s decline is stopping, it’s possible that Japan’s recession could end in the current quarter,” Yoshiki Shinke, chief economist at Daiichi Life Research Institute in Tokyo, said before the report.

To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

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