Japan’s Capital Spending Contracts For Second Consecutive Quarter

Capital spending among Japanese companies has contracted for the second consecutive quarter between July and September as a result of the coronavirus pandemic and its impact on demand. According to data released by the Ministry of Finance (MOF), capital expenditure by Japanese firms declined by 10.6% YoY in July-September after falling by 11.3% between April and June.

On a quarterly basis as well, capital expenditure was down by 1.2% QoQ, better than the 7.1% QoQ drop seen in the previous quarter. The decline was also smaller than the 3.4% contribution from capex towards Japan’s prelim GDP figures for the period between July and September.

Meanwhile, corporate profits have also registered a 28.4% decline YoY between July and September, falling for the sixth consecutive quarter. However, the decline was significantly lesser than the near 50% fall seen in the previous quarter, at the height of the lockdowns and restrictions caused by the coronavirus pandemic.

The jobless rate in Japan increased from 3% in September to 3.1% in October as forecast by economists, although the job availability showed a slight improvement from 1.03 to 1.04 for the same period. This was the first time in one and a half years that available jobs reading has picked up.