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

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