TOKYO - Japanese firms boosted capital spending in the September quarter, as retailers and wholesalers raised investment ahead of a long-awaited sales tax hike in October and factories maintained their automation push.
Business investment has been a rare bright spot for the world’s third-largest economy, as companies move to boost automate their production, however, there are concerns momentum could slow significantly in the current quarter. “There is a good possibility that business spending will be negative” in the fourth quarter, and pull economic growth into negative territory, he said.
On a seasonally adjusted basis, capital expenditure slipped 0.8% from the previous quarter. Corporate profits and sales fell on year as firms felt the pain from a prolonged Sino-U.S. trade war and slowing growth of China’s economy. A string of gloomy data since then has fueled speculation the government may put together a large-scale economic stimulus package with fiscal spending exceeding $92 billion to keep the economy’s fragile recovery intact.
“The bright news is that capital spending in the manufacturing industry was holding up in the July-September quarter,” said Shigeto Nagai, head of Japan economics at Oxford Economics.