MNI BRIEF: Japan's Q3 Capex Up Q/Q; GDP Seen Revised Higher

Japan's Q3 GDP is likely to be revised higher after combined capital investment by non-financial companies excluding software rose 2.7% q/q in the third quarter of 2022, up from 2.3% in Q2, a quarterly revised survey released by the Ministry of Finance Thursday showed.

The MOF survey, based on the demand side, is the key to calculating Q3 GDP revisions, which are due Dec. 8, and indicated capex will be revised up from preliminary estimate of growth of 1.5%.

Based on the MOF data on capex and inventories, the government is likely to revise up its estimate of Q3 real GDP from the preliminary estimate of -0.3% q/q, or an annualized -1.2%.

Combined capital investment by non-financial companies including software rose 2.4% q/q in Q3 after rising 4.1% in Q2.

Capital investment plans in the current fiscal year remained solid on the back of high corporate profits, according to the Bank of Japan’s Tankan business sentiment survey.

Combined non-financial current profits surged 18.3% y/y in Q3, up from 17.6% in Q2. Current profits at manufacturers rose 35.4% y/y in Q3 compared to 11.7% in Q2, while those at non-manufacturers also rose 5.6% in Q3 compared to 21.9% in Q2.