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Japan’s capital investment marks growth for 7th straight quarter

Chip-related production the biggest contributor to 11 year-high rate growth

Increased output in semiconductor-related industries led the rise in capital investment, which saw the highest rate of growth since before the global financial crisis.

TOKYO -- Total capital investment by Japanese corporations for the three months through June rose 12.8% year-on-year, boosted by increases in semiconductor-related industries, according to statistics from the Ministry of Finance released on Monday.

This marks the seventh straight quarter of increase and the highest rate of growth in about 11 years -- since the January to March 2007 period before the global financial crisis.

The figure applies to corporations that are capitalized at 10 million yen ($90,155) or more, across all sectors except for finance. Efforts to improve production capacity among semiconductor-related manufacturers led the increase. 

The overall rise for manufacturing sectors came to 19.8%, among which the information and communication electronics equipment sector made the biggest contribution, with a 66.1% increase. Many component makers of chips and chipmaking machines have sought to raise output in recent months.

Improvements to production capacity by carmakers and parts manufacturers led the chemical products and the transport equipment sectors to record double-digit growth.

Nonmanufacturing sectors as a whole posted a 9.2% increase, thanks largely to extensive spending by the transport and postal activities sector on urban redevelopment projects near train stations.

The latest numbers will be reflected in the capital expenditures in the revised April-June gross domestic product figures to be released on Sept. 10. The preliminary all-industry capital expenditures figure for the April-June period, released Aug. 10, was up 1.3% on a seasonally adjusted basis in real terms from the previous three months.

"This is an unequivocal upgrade, and it will surely push overall GDP upward," said Taro Saito, economist at NLI Research Institute.

The combined ordinary profit for all industries for the three months to June grew 17.9% from a year ago to an all-time-high of 26.4 trillion yen. Sales notably increased in the chipmaking equipment and construction machinery segments.

In nonmanufacturing industries, profits for the services segment received a boost from higher dividends from subsidiaries. Sales for all industries increased 5.1% from a year ago.

Capital expenditure for all industries in fiscal 2017, announced the same day, was up 5.8% from a year ago to 45.45 trillion yen, the highest figure since 2001, when comparable figures became available.

Ordinary profit for the year grew 11.4% to 83.55 trillion yen, also the highest figure. Internal reserves totaled 446 trillion yen, increasing 9.9% on the year and renewing the record for a sixth consecutive year.

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