AIRLINK 62.07 Increased By ▲ 0.47 (0.76%)
BOP 6.33 Increased By ▲ 0.07 (1.12%)
CNERGY 4.14 Increased By ▲ 0.01 (0.24%)
DFML 15.95 Decreased By ▼ -0.25 (-1.54%)
DGKC 68.60 Increased By ▲ 0.95 (1.4%)
FCCL 18.02 Increased By ▲ 0.11 (0.61%)
FFBL 25.65 Increased By ▲ 0.05 (0.2%)
FFL 9.24 Decreased By ▼ -0.02 (-0.22%)
GGL 10.03 Decreased By ▼ -0.02 (-0.2%)
HBL 115.75 Increased By ▲ 0.95 (0.83%)
HUBC 112.26 Decreased By ▼ -0.24 (-0.21%)
HUMNL 6.60 Decreased By ▼ -0.05 (-0.75%)
KEL 4.61 Increased By ▲ 0.15 (3.36%)
KOSM 4.67 Increased By ▲ 0.12 (2.64%)
MLCF 38.29 Increased By ▲ 0.28 (0.74%)
OGDC 123.65 Decreased By ▼ -1.96 (-1.56%)
PAEL 22.58 Increased By ▲ 0.06 (0.27%)
PIAA 11.05 Decreased By ▼ -0.03 (-0.27%)
PIBTL 6.65 Increased By ▲ 0.18 (2.78%)
PPL 106.81 Decreased By ▼ -1.59 (-1.47%)
PRL 27.86 Decreased By ▼ -0.19 (-0.68%)
PTC 10.75 Decreased By ▼ -0.05 (-0.46%)
SEARL 52.65 Decreased By ▼ -0.15 (-0.28%)
SNGP 67.74 Increased By ▲ 0.94 (1.41%)
SSGC 11.50 Increased By ▲ 0.09 (0.79%)
TELE 7.21 Increased By ▲ 0.01 (0.14%)
TPLP 11.58 Decreased By ▼ -0.36 (-3.02%)
TRG 77.17 Decreased By ▼ -0.63 (-0.81%)
UNITY 21.42 Decreased By ▼ -0.27 (-1.24%)
WTL 1.27 Decreased By ▼ -0.05 (-3.79%)
BR100 6,516 Increased By 16.8 (0.26%)
BR30 22,248 Decreased By -18.7 (-0.08%)
KSE100 63,559 Increased By 252.7 (0.4%)
KSE30 21,387 Increased By 90.3 (0.42%)

TOKYO: Japan’s capital expenditure growth slowed in July-September despite companies reaping solid profits, data showed on Friday, casting doubt on the central bank’s view that robust corporate spending will underpin a fragile economic recovery.

The reading is unlikely to lead to a big revision in preliminary gross domestic product (GDP) data, which showed the world’s third-largest economy shrank for the first time in three quarters in July-September.

“It’s true capital expenditure is rising as a trend. But given corporate profits are renewing historical highs, it’s hard to say firms are more actively spending the money on plant and equipment,” said Taro Saito, an economist at NLI Research Institute.

Companies increased capital expenditure by 3.4% in the third quarter from the same period the previous year, government data showed, smaller than a 4.5% increase in April-June.

The slowdown came even as their recurring profits rose 20.1% in the third quarter from year-before levels with a 40% jump in non-manufacturers’ profits offsetting a 0.9% slide for that of manufacturers, the data showed.

Japan, China foreign ministers agree plan to hold security talks, improve ties

The capital expenditure figure will be used to calculate revised third-quarter GDP data due out on Dec. 8.

In the preliminary GDP data, capital expenditure fell 0.6% which, coupled with a flat reading in consumption, led to an annualised 2.1% contraction in the July-September period.

Saito of NLI Research expect revised data to show the economy shrank an annualised 2.2% in the third quarter with capital expenditure seen revised down to a 0.8% fall.

SMBC Nikko Securities expects a slight upward revision in GDP growth to an annualised 2.0% contraction.

“There’s no change to our view the economy shrank in July-September due to weak domestic demand, with consumption and capital expenditure remaining sluggish for two straight quarters,” SMBC Nikko analysts wrote in a research note.

The outlook for corporate profits is key to how soon the Bank of Japan may phase out its massive stimulus, as the bank’s scenario is based on the view that companies will keep earning enough to hike wages and boost spending on plant and equipment.

BOJ board member Toyoaki Nakamura said on Thursday he was keeping a close eye out on the quarterly business expenditure survey and other clues on whether corporate profitability was heightening.

Comments

200 characters