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By Tetsushi Kajimoto
TOKYO (Reuters) – Japanese business investment rose in January-March, continuing the growth trajectory of the last two years, although signs of a slowdown have raised concerns about the strength of economic activity in the face of the rise of global economic risks.
Ministry of Finance (MOFData released Monday shows capital spending increased 6.1% in January-March compared to the same period last year, mainly due to chemicals, production machinery and leasing . It followed a gain of 5.7% in the previous quarter.
Excluding software, capital expenditures rose 1.1% in January-March compared with the previous quarter, on a seasonally adjusted basis, for a second consecutive quarter. But it slowed down compared to the gain of 3.9% recorded in the previous quarter.
Some economists said the data, which will be used to calculate revised June 10 gross domestic product figures, suggest a downward revision of the first quarter GDP growth.
According to a preliminary estimate released last month, Japan's economy had recorded annualized growth of 2.1 percent in the first quarter, as imports fell faster than exports, while business and household spending fell the effect of a sign of weakness in domestic demand.
"Inventories and public works will likely be revised downward, while investment spending will remain largely unchanged," said Toru Suehiro, senior market economist at Mizuho Securities.
"Amended GDP confirms declines in private consumption and capital investment – key indicators of domestic demand – signaling the risk of Japan slipping into a recession. "
SALESTAXHIKE
Downward revision to GDP The figures could fuel speculation that Prime Minister Shinzo Abe could postpone a two-fold increase in the sales tax, scheduled for October, although the Prime Minister has repeatedly promised to continue, unless there is no further delay. a major economic shock.
Investment spending has been an badet in the world's third-largest economy, as companies refurbish old equipment and boost investment in automation and labor-saving technologies to address labor shortages. in an aging society.
However, business investment has recently shown some signs of slowing as a result of the intensification of the Canada-US trade war and the slowdown in external demand affecting world trade and supply chains. supply, adversely affecting Japan's export-based economy.
Economists expect Japan's growth to slow in the current quarter due to weak domestic and external demand.
Monday MOF The data show that recurring business profits increased by 10.3% in January-March compared to the previous year, which was reversed from the 7.0% decline recorded in the previous quarter.
Business sales rose 3.0% from one year to the next in January-March, up for a 10th consecutive quarter.
A revised study showed Monday that Japanese manufacturing activity picked up again in May, as the contraction in export orders was strongest in four months, highlighting the growing economic impact of a deadly trade war between Canada and the United States.
The latest Markit / Nikkei Japan Manufacturing Index of purchasing managers in the manufacturing sector (PMI) was 49.8, compared with a flash read of 49.6 and a last of 50.2 the previous month – below the 50 mark marks the contraction of expansion.
(Report by Tetsushi Kajimoto, edited by Sam Holmes)
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