Japanese companies boost capital spending

TOKYO - Japanese companies boosted capital spending in the April-June quarter from a year earlier, reinforcing the view that robust capital spending was underpinning a recovery in the world's second largest economy.

A survey by the Ministry of Finance showed on Monday spending on plant and equipment rose 16.6 per cent, the 13th straight quarter of increase and stronger than economists had expected.

Capex excluding software investment rose 18.4 per cent from a year earlier, a Ministry of Finance official told reporters, in the biggest such rise since 1990, during Japan's bubble economy era.

But economists, who had expected an increase in spending on plant and equipment of between 12.0 and 15.4 per cent, played down the likelihood that the strong growth would prompt a sharp upward revision to gross domestic product (GDP) figures for the quarter, when revised data is issued on September 11.

Preliminary data last month showed Japan's economy grew a real 0.2 per cent in April-June from the previous quarter, or 0.8 per cent on an annualised basis.

Japan's economy has enjoyed a steady recovery over the past few years, aided initially by robust exports but increasingly by resilient capital spending in recent years.

The survey also showed recurring profits rose 10.1 per cent in April-June from the same quarter a year earlier to ¥14.5 trillion($191.7 billion).

The pace of rises picked up from the 4.1 per cent increase logged in January-March.

Sales rose 8.6 per cent, compared with a 5.0 per cent year-on-year increase in the previous quarter.

The survey was based on responses from 19,798 companies.

- REUTERS