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Mon, May 26, 2008 - Page 10 News List

Japanese slow investment


Japanese companies are slowing down their capital investment in the face of a stronger yen, rising material costs and concerns about the US economy, a report said yesterday.

They plan to increase spending in plants and equipment by 3.7 percent in the year to next March, representing the sixth straight year-on-year gain but the smallest rise in five years, the leading business daily Nikkei Shimbun said.

The daily was citing a survey of 1,523 firms, mostly big companies.

“The overall trend is probably weaker than the result shown here because smaller firms are generally more cautious about capital spending,” it said.

Among the firms, manufacturing companies plan to boost investment by a solid 6.4 percent while nonmanufacturers intend to cut outlays by 0.4 percent, the first decrease in five years, the daily said.

Private-sector capital spending has been one of the driving forces behind Japanese economic growth.

Among the manufacturers, electronics and automobile firms are seeking to boost capital investment by 6.8 percent and 2.5 percent respectively, topping growth rates seen in the year to March to meet burgeoning demand from emerging countries, the report said.

Steelmakers are also bullish as they plan to spend 10.2 percent more on plant and equipment.

Soaring fuel and materials prices hit spending plans hard, with textile companies and paper and pulp manufacturers expecting to cut capital investment, the report said.

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