Japan’s businesses continued to increase spending for five straight quarters despite headwinds including a global economic slowdown and a weaker yen, an outcome that could help revise up last quarter’s growth figures.
(Bloomberg) — Japan’s businesses continued to increase spending for five straight quarters despite headwinds including a global economic slowdown and a weaker yen, an outcome that could help revise up last quarter’s growth figures.
Capital expenditure excluding software rose 0.3% in the three months through December from the previous quarter, the finance ministry reported Thursday. Manufacturers increased spending by 1.1%, while service sector firms decreased by 0.1%.
Preliminary gross domestic product figures from the cabinet office had shown firms cutting spending by 0.5% in the final quarter of 2022. Thursday’s data will be incorporated into revised gross domestic product figures due March 9.
The preliminary reading indicated some weakness in Japan’s business activity, suggesting that the country still has a long way off before a full recovery.
The latest data suggests corporate spending, particularly in the manufacturing sector, remained resilient despite a number of setbacks Japan faced during the last three months of last year.
One was the global slowdown, whose effects have gradually become apparent. Other central banks have aggressively raised interest rates, worsening the economic climate for Japan’s business partners.
China’s sudden turnaround in its virus control measures resulted in a sharp resurgence of cases at the end of last year. Exports to China have sunk for two consecutive months since December.
The global slowdown and the strength of China’s recovery, may continue to bring uncertainty to Japan’s economy in the next quarter and beyond.
Another headache for the Japanese economy was the falling yen, which inflated import costs.
Read more: Japan Stepped Into Forex Market Twice in October to Prop Up Yen
The historic yen slide led to the government intervening in the foreign exchange market twice in October to prop up the currency. Although the yen gained to some extent through November and December, the impact of the embattled yen still lingers.
(Updates with additional details from report)
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