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REPEAT: MNI 5 THINGS: Japan Q1 Capex Slows; GDP Revision Small

     TOKYO (MNI) - Japanese business investment and profits slowed in the
January-March quarter from the previous three months but the increase in
investment in equipment excluding software was similar to an official estimate
last month, indicating there may be only a slight revision to the Q1 GDP
contraction, government data showed Friday.
     Companies became cautious about implementing their capex plans in the first
quarter as protectionist moves raised uncertainty over global trade and
investment while the appreciation of the yen led to a slower pace of growth in
     Japan's modest economic recovery took a breather in the first quarter of
2018 as the severe winter weather and high fresh food and fuel prices hurt
consumption, mitigating the positive effect of a slight gain in net exports.
     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 3.4% on year in
the January-March period, posting the sixth straight q/q rise, but the pace of
increase decelerated from +4.3% in October-December.
     * Capex excluding software gained 2.1% on year in Q1, also slowing from
+4.7% in Q4. On quarter it rose to Y13.4 trillion, up 28.5% from Y10.5 trillion
in Q4. The pace of increase is similar to the temporary estimate of +26.4% for
demand-side unadjusted capex provided by the Cabinet Office in the preliminary
Q1 GDP data released on May 16.
     * The MOF survey based on the demand side is the key to calculating
revisions to Q1 GDP due out on June 8. Capex in preliminary GDP, which is based
solely on supply side data, fell 0.1% on quarter and had a 0.0 percentage point
negative contribution to the total domestic output.
     The real gross domestic product (GDP) fell a preliminary 0.2% on quarter,
or an annualized 0.6% in Q1. It was the first contraction in nine quarters,
since Q4 of 2015.
     * The MOF data showed that combined capital outlays (excluding software)
fell 0.0% in Q1, marking the first quarter-on-quarter drop in three quarters on
a seasonally adjusted basis, after rising a revised 3.2% in Q4.
     * Business investment in the manufacturing sector rose 2.8% on year in Q1
vs. +6.5% in Q4 while that in the non-manufacturing sector gained 3.6% on year
in Q1 vs. +3.0% on year in Q4.
     * Combined non-financial current profit rose 0.2% on year in Q1, slowing
from +0.9% in Q4, as manufacturers were hit by the yen's rise during the
quarter. Current profits at manufacturers fell 8.5% on year in Q1 vs. +2.5% in
Q4 while those at non-manufacturers rose 5.0% on year vs. -0.0% in Q4.
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email:

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