Capital spending by Japanese firms rises 4.6 pct in April-June quarter

TOKYO, Sept. 1 (Xinhua) -- Business spending by Japanese companies increased 4.6 percent in the April-June quarter from a year earlier, the government said in a report on Thursday.

According to the Finance Ministry, capital spending by all non-financial sectors rose by 4.6 percent in the previous quarter to 10.61 trillion yen (76.01 billion U.S. dollars).

The ministry's data revealed a fifth straight quarterly gain in capital expenditure on the back of increased spending by businesses looking to boost output and procure more equipment to meet a rebound in demand.

In twine with a comparatively weak yen versus its major counterparts being a boon for big firms, although import costs for energy and raw materials are currently inflated, the lifting of COVID-19-related restrictions on businesses and patrons has helped the heavily damaged services sector significantly recoup lost ground.

Non-financial companies' pre-tax profits, meanwhile, soared 17.6 percent on year to a record 28.32 trillion yen (202.94 billion dollars) in the April-June period, the ministry also said.

This was in part owing to a weak yen and firms recovering from the downside effects of the COVID-19 pandemic.

Manufacturing and services sectors reported record pre-tax profits, with manufacturers booking an 11.7 percent leap on year to 11.23 trillion yen (80.48 billion dollars), while non-manufacturers logged a 17.09 trillion yen (122.48 billion dollars) profit, the ministry said.

Manufacturers' capital spending jumped 13.4 percent to 3.86 trillion yen (27.67 billion dollars), in the recording period, while growth in the non-manufacturing sector remained flat at 6.75 trillion yen (48.39 billion dollars), the ministry's data showed.

Sales rose 7.2 percent in the quarter to 336.96 trillion yen (2.41 trillion dollars), the ministry said.

"The latest results are in line with the view that the economy is recovering moderately. We need to closely watch the impact of rising prices and supply constraints on corporate activity," a ministry official was quoted as saying.

The latest figures from the ministry involved it polling 32,822 large-capped companies, of which 68.5 percent responded.

The quarterly data on capital expenditure by Japanese firms is vital for the Cabinet Office to revise the April-June period gross domestic product data, before it's released on Sept. 8.

The office's preliminary data revealed Japan's economy grew at an annualized pace of 2.2 percent in real terms in the quarter.