Indicator Digest - CMS Forex

Capital Spending

Main Indicator: Capital Spending q/q

Most Recent Release

September
4th, 2008

Actual

Forecast

Revised Form

-6.5%

0.3%

-4.9%

N/A

For 2nd Quarter
Provided by: Ministry of Finance

Excl. Software (2Q): -7.6%, forecast -1.0%, pr. -5.3% (1Q), -7.3% (4Q)

Capital spending took another a another tumble in the 2nd quarter falling 6.5%, far below expectations of a small increase. Companies faces higher oil and commodity prices and a decrease in demand for the country's exports due to slowing global growth. Weaker demand from home and abroad, combined with record energy and material costs, reduced the willingness of companies to spend. The spending data factors into the GDP, and will likely cause GDP to be revised down from its preliminary estimate of -0.6%.

Table of Past Data

	6/3	9/2	12/2	3/4	6/3	9/4

Actual	13.6%	-4.9%	-1.2%	-7.7%	-4.9%	-6.5%
Forecast	10.1%		-2.5%	-2.4%	-9.6%	0.3%
Previous	16.8%	13.6%	-4.9%	-1.2%	-7.7%	-4.9%
Revised From	N/A	N/A	N/A	N/A	N/A	N/A

Past Releases

June
3rd, 2008

Actual

Forecast

Revised Form

-4.9%

-9.6%

-7.7%

N/A

For 1st Quarter
Provided by: Ministry of Finance

Cap Spending excl. Software (1Q): -5.3%, forecast -7.6%, pr. -7.3%

Capital spending in the 1st quarter declined 4.9% in the 1st quarter. The figure was better than the forecast 9.6% drop, and was better than the -7.7% drop in the 4th quarter. The 4th quarter was the biggest fall since July-September 2002. Today's report may be good enough to impact GDP with an upward revision. The Japanese economy grew 0.8% in the 1st quarter. However, firms are seeing their profits squeezed by higher raw materials costs, especially as a result of energy, and slowing sales in the 2nd quarter as consumers face weakening economic conditions. Those two factors may limit capital spending going forward this year.

March
4th, 2008

Actual

Forecast

Revised Form

-7.7%

-2.4%

-1.2%

N/A

For 4th Quarter.
Provided by: Ministry of Finance

Spending on capital fell by 7.7% in the 4th qaurter a larger than expected decline, and also the third contraction in a row. It was the largest fall in 5 years, and will factor in to lower GDP for the quarter. Profits were held up by rising oil and raw materials costs, pinching spending by companies. The USD/JPY bounced up from a new multi-year low, near support at 102.60.

December
2nd, 2007

Actual

Forecast

Revised Form

-1.2%

-2.5%

-4.9%

N/A

For 3rd Quarter.
Provided by Ministry of Finance.

Capital Spending excl Software: -0.6% (3rd Q), forecast -2.5%, pr. -5.7% (2nd Q)

Profits at the 24,000 companies surveyed showed a decline in the July-September period, the first time profits have declined in 5 years. Smaller profits gave companies less money to order capital, which saw a fall of 1.2% in the 3rd quarter, after falling 4.9% in the 2nd quarter.

September
2nd, 2007

Actual

Forecast

Revised Form

-4.9%

13.6%

N/A

The Ministry of Finance said that the capital spending in the 2nd Quarter for Japanese companies fell for the first time in seventeen quarters, measuring -4.9% from last year. In the 1st Quarter capital spending rose 13.5% from a year ago. Investment, excluding software, was also down, a -5.7% change for the 2nd Q. from last year; investment showed a 14.2% increase in the March quarter.
The manufacturing sector did well, showed a 11.7% increase. Non-manufacturing sectors struggled, led by drops in capital spending in real estate (-47.3%)and services (-21.1).
Combined profit of non-financial firms increased 12.0% following a 7.4% increase in the previous quarter; and sales were up 3.3% (previously +6.3%). Corporate finance to all industries expanded 5.5% (previously 11.5%).

June
3rd, 2007

Actual

Forecast

Revised Form

13.6%

10.1%

16.8%

N/A

For Q1 year over year, including software. Capital Spending has been strong going 5 consecutive quarters of double-digit growth. Corporate profits rose 7.4% from Q1 of 2006. Corporate sales were up 6.3% from the same period.