— Japan Q4 Non-Financial Firm Capex +7.6% Y/Y; MNI Forecast -6.4%
— Japan Q4 Non-Financial Firm Capex Posts 1st Y/Y Rise in 3 Qtrs
— Japan Q4 Capex (Ex-Software) +4.9% Y/Y Vs Q3 -11.0%
— Japan Q4 Capex (Ex-Software) S/A +11.9% Q/Q; MNI F’cast +2.7%
— Japan Q4 Capex (Ex-Software) 1st Q/Q Rise in 5 Qtrs; Q3 -0.9%
— Japan Q4 Manufacturer Capex +5.7% Y/Y Vs Q3 -1.6%
— Japan Q4 Non-Manufacturer Capex +8.6% Y/Y Vs Q3 -14.3%
— Japan Q4 Non-Fncl Firm Current Profit -10.3% Y/Y Q3 -8.5%

TOKYO (MNI) – Combined capital investment by non-financial Japanese
companies unexpectedly rebounded in the October-December quarter despite
plunging profits caused by the global slowdown and the strong yen, a
Ministry of Finance survey showed on Thursday.

The survey is the key to calculating revisions to Q4 GDP due out on
March 8.

Non-financial firm capex surged 7.6% in the three months to Dec. 31
from a year earlier, the first rise in three quarters, following a 9.8%
drop in the previous quarter.

The headline figure was the best reading since +13.6% in the first
quarter of 2007 and much stronger than economists’ median forecast for a
6.4% decline in a Market News International survey.

Business investment excluding spending on software rose 4.9% from a
year before in Q4, also the first increase in three quarters, following
a 11.0% fall in the previous quarter.

The yen hit an all-time high of Y75.32 on Oct. 31 last year,
prompting the Bank of Japan, on behalf of the Ministry of Finance, to
spend more than Y9 trillion to buy dollars in the foreign exchange
market.

Slower global demand for semiconductors, automobiles and steel
products, combined with the yen’s strength, led to a fourth straight
year-on-year drop in Japanese exports in January this year.

This has resulted in lower sales and profits for many companies but
a MOF official said the Q4 capex increase was led by the chemical and
auto industries that had to rebuild construction facilities damaged by
the March earthquake.

Retailers also increased spending on newly opened outlets, he said.

In the manufacturing sector, capex rose 5.7% in Q4 following a 1.6%
dip in the previous quarter, the MOF survey showed.

Capex in the non-manufacturing sector rose 8.6% in Q4 following a
14.3% drop in the previous quarter. The increase was led by
the construction, real estate and wholesale/retail industries.

On a seasonally adjusted, quarter-over-quarter basis, capex
excluding spending on software jumped 11.9% in the December quarter,
posting the first q/q rise in five quarters after a downwardly revised
fall of 0.9% in the previous quarter.

The quarterly survey by the MOF also showed that the combined
current profits before extraordinary items of non-financial firms at the
parent level dropped 10.3% from a year earlier in the fourth quarter.

It was the third consecutive year-on-year decline following a 8.5%
drop in the previous quarter.

Profits were also pushed down by the supply chain breakdown in
flood-hit Thailand, a key production center in the region.

The ministry surveyed 30,656 companies with capital at or above Y10
million and received replies from 22,640.

The survey is the last piece of data from the demand side used to
compute revisions to gross domestic product for the fourth quarter due
out on March 8. Capex in preliminary GDP data is based solely on the
supply side estimate.

Preliminary data released last month showed that Japan’s economy
contracted a real 0.6% in the October quarter from the previous quarter,
or an annualized 2.3%, even though non-residential investment, or capex,
rose 1.9%, or an annualized 7.9%.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4835 **

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