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Economy

Japan's April-June business investment up 3.0% despite tax hike

TOKYO (Kyodo) -- Capital spending by Japanese companies rose 3.0 percent from a year earlier in the April-June period, suggesting the first consumption tax hike in 17 years did not significantly affect corporate investment, the government said Monday.

     Business investment by all nonfinancial sectors for purposes such as building plants and introducing new equipment gained for the fifth straight quarter in the three months through June to 8.56 trillion yen, the Finance Ministry said.

     On a quarter-on-quarter basis, business investment, excluding spending on software, fell a seasonally adjusted 1.8 percent from the January-March period, down for the first time in three quarters, the ministry said.

     The data will affect revisions to Japan's economic growth figures, with the Cabinet Office scheduled to release revised gross domestic product data for the same period on Sept. 8.

     Monday's reading showed capital spending by manufacturers decreased for the first time in three quarters, down 0.8 percent on year to 2.83 trillion yen, and nonmanufacturers posted a 5.0 percent rise to 5.73 trillion yen, up for the fifth consecutive quarter.

     By sector, the real estate industry increased its investment to develop commercial facilities and office buildings, while the entertainment sector beefed up spending related to amusement parks, an official of the Finance Ministry said.

     A preliminary GDP report released Aug. 13 showed Japan's economy plunged an annualized real 6.8 percent in the April-June quarter, down at its fastest pace since the devastating March 2011 quake-tsunami disaster, hurt by the 3-percentage-point consumption tax hike to 8 percent from April 1.

     According to the preliminary GDP report, capital spending -- which accounts for around 15 percent of Japan's GDP -- dropped 2.5 percent on quarter.

     During the second quarter of this year, the yen slid by 3.38 yen to 102.14 yen against the U.S. dollar from a year before on an average basis, the official said.

     A falling yen usually supports exports by making Japanese products cheaper abroad and boosts the value of overseas revenue in yen terms, helping improve corporate profits and prompt firms to bolster their investment.

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