MNI BRIEF: Japan Q1 Capex Up Q/Q, GDP Revised Higher

Combined capital investment by non-financial Japanese companies excluding software rose 2.7% q/q in Q1, accelerating from a 0.7% gain in Q4 2022, a quarterly revised survey released by the Ministry of Finance Thursday showed.

The MOF uses the survey, based on demand, to calculating Q1 GDP revisions due June 8. The results indicate the Ministry will likely revise up capex from preliminary estimates of 0.9%, which was based solely on supply side data. The government will also likely revise its estimate of Q1 real GDP from the preliminary 0.4% q/q, or an annualised 1.6%.

The same data including software, meanwhile, rose 2.3% q/q in Q1 after rising 0.8% the previous quarter. Capital investment plans in the current fiscal year remain solid following high corporate profits, according to the Bank of Japan’s March Tankan business sentiment survey.

Capex excluding software rose 10% y/y in Q1, up from 6.3% in Q4 2022. Combined non-financial current profits rose 11% y/y in Q1 following 7.7% the previous quarter. Current profits at manufacturers fell 15.7% y/y in Q1 compared to a 15.7% fall in Q4, while those at non-manufacturers also rose 17.2% against 5.2% in Q4.