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 automate their production, however, there are concerns momentum could slow significantly in the current quarter. Japan introduced a twice-delayed sales tax hike on Oct. 1, raising the levy to 10% from 8%, to fix the industrial world’s heaviest public debt burden at more than twice the size of the economy.
The data will be used to calculate revised third-quarter gross domestic product figures due on Dec. 9. Retail sales tumbled at their fastest pace in more than 4-1/2 years in October, while factory output posted its biggest fall since early 2018, exposing widening cracks in an economy that faces weakening foreign and domestic demand.
“In August, sentiment was not so good because of worries over an acceleration of U.S.-China trade tensions,” he said. “Markets were also in rough weather.”
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