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Q3 Capex Rise May Aid GDP Revisions, Profits Better Than Expected


Japan Q3 capital spending was right on consensus estimates at 3.4%y/y, but slowed versus Q2's 4.5% pace. Q3 was the softest pace since the start of 2022 in y/y terms. Ex software spending was below expectations, +1.7% y/y (+3.4% forecast and 4.4% prior). Momentum is now back to 2021 levels.

  • Still, in q/q terms capex rose 1.4%, up 0.3% ex software. This contrasts with the initial Q3 business investment figures (in the GDP print), which showed a -0.6% dip. Note we get GDP revisions on the 8th of Dec (next Friday).
  • Manufacturing investment was -0.4% q/q, while non-manufacturing rose 2.4%.
  • Company profits were much stronger than forecast, rising 20.1% y/y, versus+13.8% forecast (11.6% prior). Company sales were at 5.0% y/y for Q3 (4.5% forecast and 5.8% prior).
  • We were up 0.8% q/q (after Q2's +10.0%). Manufacturing rose 4.9%.
  • Again, the authorities will be hopeful that the bumper profit backdrop allows companies to raise wages more, a key domestic political/BoJ focus point.

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