\n
By Makiko Yamazaki<\/p>\n
TOKYO, March 3 (Reuters) – Japanese spending on factories and equipment rose 6.5% on-year in the fourth quarter, Ministry of Finance data showed on Tuesday, indicating resilient investment \u200cdemand continued to support a barely growing economy.<\/p>\n
The encouraging data, which will be used \u200cin calculating revised gross domestic product figures scheduled for March 10, comes as the government seeks to bolster investment through targeted \u200bpublic outlay in sectors it deems vital for economic security.<\/p>\n
“The data shows that overall capital expenditures have been firm,” Meiji Yasuda Research Institute economist Kazutaka Maeda said, adding that the GDP figures are likely to be revised up.<\/p>\n
Preliminary data last month showed the economy grew an annualised 0.2% in the final quarter of \u200clast year, undershooting forecasts as inflation \u2060squeezed consumption while a tariff agreement with the U.S. did little to drive exports.<\/p>\n
Capital expenditure, a gauge of domestic demand-led economic growth, totalled 15.4 trillion yen ($97.9 billion) \u2060in October-December, hitting a record high for the quarter.<\/p>\n
It rose for a fourth-straight quarter, with growth accelerating from the previous quarter’s 2.9% on-year gain. On a seasonally adjusted basis, it grew 3.5% from July-September.<\/p>\n
The data also \u200bshowed \u200bcorporate sales rose 0.7% in the fourth quarter from \u200ba year earlier, while recurring profit increased \u200c4.7%.<\/p>\n
Japan’s capital expenditure has been generally firm in recent years as companies replace ageing, low-efficiency equipment to cope with a chronic labour shortage linked to a shrinking population.<\/p>\n
An exit from deflation has further prompted firms to bring investment forward, anticipating increases in capital costs.<\/p>\n
Looking ahead, economists said planned government policy steps to spur corporate spending – such as capital injections, subsidies and tax credits – could have a meaningful impact \u200con the economy.<\/p>\n
Mizuho Research & Technologies estimated the measures would lift \u200bcapital expenditure by about 1%, offsetting any drag from rising \u200binterest rates.<\/p>\n
The think tank forecast real capital \u200bexpenditure growth of 2.7% in fiscal 2026, which begins on April 1, and \u200c2.5% in fiscal 2027.<\/p>\n
However, Meiji Yasuda’s Maeda said \u200bit is questionable whether \u200bgovernment funding alone would directly spur companies to invest, adding that firms already have sufficient profits to allocate to capital spending if they choose to.<\/p>\n
“By putting in some money, the government \u200bhopes to nudge firms toward becoming \u200cinvestment\u2011oriented, but I’m not entirely convinced,” Maeda said. “Growing external risks, such as tensions in \u200bthe Middle East and tariff issues, complicate firms’ willingness to invest.”<\/p>\n<\/p><\/div>\n
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