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MNI 5 THINGS: Japan Q2 Capex Up Sharply, GDP Seen Revised Up

--Japan Q2 Non-Financial Firm Capex +12.8% Y/Y; Q1 +3.4% 
--Japan Q2 Capex (Ex-Software) +14.0% Y/Y; Q1 +2.1% 
--Japan Q2 Capex (Ex-Software) S/A +6.9% Q/Q; Q1 +0.8% 
--Japan Q2 Manufacturer Capex +19.8% Y/Y Vs Q1 +2.8% 
--Japan Q2 Non-Manufacturer Capex +9.2% Y/Y Vs Q1 +3.6% 
--Japan Q2 Non-Financial Current Profit +17.9% Y/Y Q1 +0.2%
     TOKYO (MNI) - Combined capital investment by non-financial Japanese
companies surged 12.8% on year in the April-June quarter after rising 3.4% in
January-March, the results of a quarterly survey of capital investment and
corporate profits by major companies released Monday by the Ministry of Finance
showed.
     The results are likely to lead the government to revise up its estimate of
Q2 GDP in data due on Monday, Sept. 10.
     The key points from the Ministry of Finance quarterly survey called the
Financial Statements Statistics of Corporations by Industry:
     * Capital investment by non-financial Japanese firms rose 12.8% on year in
the April-June period, posting the seventh straight q/q rise, and the pace of
increase accelerated from +3.4% in January-March. It was the highest growth
since +22.6% in April-June 2017.
     * Investment in equipment was backed by solid global and domestic demand as
well as the need to cope with labor shortages in April-June, when the U.S.-China
trade dispute had little direct impact on Japanese exports or production. Capex
in the manufacturing sector rose 19.8% on year in Q2 vs. +2.8% in Q1 while that
in the non-manufacturing sector gained 9.2% vs. +3.6%.
     * Capex excluding software gained 14.0% on year in Q2, also accelerating
from +2.1% in Q1. Combined capital outlays (excluding software) rose a
seasonally adjusted 6.9% in Q2, marking the first rise in five quarters after
rising a revised 0.8% in Q1.
     * The MOF survey based on the demand side is the key to calculating
revisions to Q2 GDP due out on Sept. 10. Capex in preliminary GDP, which is
based solely on supply side data, rose 1.3% on quarter and pushed up the total
domestic output by 0.2 percentage point.
     * Based on the MOF data on capex and inventories, the government is likely
to revise up its estimate of Q2 real GDP growth from a preliminary +0.5% on
quarter, or an annualized +1.9%. The growth in the second quarter followed a
contraction of 0.2% on quarter, or an annualized -0.9% in the first quarter.
     * Combined non-financial current profit jumped 17.9% on year in Q2,
accelerating from +0.2% in Q1. Current profits at manufacturers rose 27.5% on
year in Q2 vs. -8.5% in Q1 while those at non-manufacturers rose 12.4% vs. +5.0%
in Q1.
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com
[TOPICS: MAJDS$,M$A$$$,M$J$$$,MT$$$$]

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