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Economy

Japanese companies' capital spending falls 3.5%

First decline in 13 quarters comes as companies' pretax profits drop by 4.6%

Japanese companies in nonfinancial sectors spent $108 billion to build factories and install equipment in the final quarter of 2019.

TOKYO (Kyodo) -- Capital spending by Japanese companies fell 3.5 percent in the October-December quarter from a year earlier, the first decrease in 13 quarters, government data showed Monday.

Investment by all nonfinancial sectors for purposes such as building factories and adding equipment totaled 11.63 trillion yen ($108 billion), according to the Finance Ministry.

Pretax profits at companies covered in the ministry's survey declined 4.6 percent to 18.58 trillion yen, down for the third straight quarter. Sales dropped 6.4 percent to 347.83 trillion yen, down for the second consecutive quarter.

The Cabinet Office is scheduled to release revised gross domestic product data for the October-December quarter on March 9, taking into account the latest capital spending figures.

Preliminary GDP data showed the world's third-largest economy shrank an annualized real 6.3 percent in the three-month period, its sharpest contraction in five and a half years, due to a sales tax hike on Oct. 1 and a devastating typhoon.

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