Japan Company Capital Spending:

 Article Source:    https://mainichi.jp/english/articles/20220302/p2g/00m/0bu/021000c

Article:  

TOKYO (Kyodo) -- Capital spending by Japanese companies in the October-December period rose 4.3 percent from a year earlier, increasing for the third consecutive quarter, on the back of a recovery from the fallout of the coronavirus pandemic, government data showed Wednesday.

Investment by all nonfinancial sectors for purposes such as building factories and adding equipment totaled 11.6 trillion yen ($101 billion), according to the data released by the Finance Ministry.

Capital spending increased both on year and from the previous quarter, with exports and output recovering as coronavirus infections remained at low levels in the reporting period, a government official said.

Ideas:

More and more economic activity is gaining momemtum as the virus begins to lesson. Even though its beginning to lesson, it can still have an effect in Japan and globally is the situation in Shangahi and the UK.

But it must be remembered that an economy is very complex meaning even though some parts of the economy is improving doesn't mean all sectors or areas are improving.

An economy can only grow as fast as the level of sentiment is there. If businesses are feeling better about business conditions and see that future conditions look promising they will continue to spend as needed.

But if their sentiment begins to waiver then the possiblity of waiting or not spending could have an effect on the ecomomy.

And now with the Ukraine situation getting worse, which could effect the global economy, Japanese businesses might halt some of their spending for the time being.

Article:

"But we will closely watch business trends as the current January-March quarter is seeing a spread of the Omicron variant (of the coronavirus) as well as the Ukraine (crisis.)"

Capital expenditures by manufacturers climbed 5.1 percent, up for the third straight quarter, to 4.1 trillion yen, led by an increase in the transportation equipment industry as carmakers introduced new models.

In the nonmanufacturing sector, spending expanded 3.8 percent, rising for the third straight quarter, to 7.5 trillion yen, as a recovery in pandemic-hit restaurants and lodging businesses contributed to the growth.

Ideas:

There might be some recovery in the domestic sector of tourism, but there will never be a complete recovery until Japan again opens up to international tourism.

Even if Japan limits international tourism to most countries except China, which is now going through some omicron challenges, it will go a long way to improving the tourism sector which over the past ten years, before the pandemic became dependent on international tourists.

International tourists spend a lot of money in Japan, and now with the Japanese yen at a ten year low, it could be a potential boom for the Japanese economy. It would be wise for the Japanese government to begin to open up and there is a lot of money waiting to be spent in Japan with again the Japanese yen at a ten year low.

The upcomine Golden Week period is going to help a lot bu its still not going to be enough. The big money is in international tourism, and Japan should take advantage of the weak yen and let international tourists back into the country.

Article:

During the reporting quarter, economic activities fully resumed in Japan as a COVID-19 state of emergency was lifted on Oct. 1 in all areas. People had been asked to refrain from non-essential outings and eateries were asked to close early under the emergency declaration.

Pretax profits at companies covered in the ministry's survey rose 24.7 percent to 23.0 trillion yen, increasing for the fourth consecutive quarter, boosted by chemical product manufacturers that saw robust demand for semiconductor parts as well as a recovery in the services sector.

Sales grew 5.7 percent to 351.0 trillion yen, up for the third quarter in a row, also led by chemical product makers.

Ideas:

As demand increases more and more companies are resuming full economic activities which is going to boost the Japanease economy even more. 

But then again evena as more and more activity increases it doesn't mean all is well. An economy is very complex, and even without the pandemic in market economy there are always some sectors and some businesses that do better than others.

The services sector still has a long way to go to get back to the pre-pandemic leve. And even if sales improve to the pre-pandemic level soon, there is still the loss of revenue and sales over the 2 year pandemic period that service sector businessees can never cover or make-up.

It might take years for service sector businesses to recover the 2+ years of losses from the pandemic, if they are sitll in business as many service sector businesses had to close.

Article:

Taking into account the latest capital spending figures, the Cabinet Office is scheduled to release revised gross domestic product data for the same quarter on March 9.

Preliminary GDP data showed the world's third-largest economy grew an annualized real 5.4 percent.

The ministry surveyed 32,274 companies capitalized at 10 million yen or more, of which 22,272, or 69.0 percent, responded.

Ideas:

Whenever the phrase "grew at an annualized ...." means that if it grew like the past quarter or the past year, and grows at the same rate.

But its just an assumption that the economy will continue to grow at the same rate, which is rarely does as there are bumps a long the way which might slow down the growth of the eonomy.

For example the Ukraine situation could derail some economic some economic growth in the Japanese economy.

And lets not for the current inflationary pressures which are hitting profits margins of all companies long with the budgets of families which means there might be less spending in the future.

Have a nice day and be safe!