Japanese Firms' Capital Spending Picks Up in Q1 2020

Japanese Firms’ Capital Spending Picks Up in Q1 2020

Posted Monday, June 1, 2020 by
Arslan Butt • 1 min read

A recent survey by the Ministry of Finance (MOF) reveals that capital spending among Japanese companies increased during Q1 2020, even though firms faced the prospect of falling profits on account of the coronavirus pandemic. Capital spending grew by 4.3% YoY during Q1 2020 after having fallen by 3.5% YoY in Q4 2019, mainly driven by higher demand for electrical machinery.

The quarterly growth works out to 6.7% QoQ seasonally adjusted during the first three months of the year. Business spending among Japanese manufacturers increased by 0.6% YoY in Q1 this year after falling by 9% during the previous quarter.

Corporate recurring profits, however, declined at the fastest rate in over a decade as the coronavirus pandemic struck all around the world and dented demand. This figure registered a 32% decline during the first three months of the year as the demand for cars and transportation goods fell due to the pandemic.

Sales fell for the third consecutive quarter, by 3.5% YoY in Q1 2020. However, the rate of decline was better than the 6.4% drop in sales seen during Q4 2019.

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