Capital spending by big Japanese companies in the year to March is projected to dip 17.6 percent from the previous year, amid uncertainty over the domestic economic recovery, a survey showed yesterday.
The survey by the Nikkei Shimbun was based on spending plans as of late last month by 1,598 firms, each with a market capital of ¥100 million (US$1.2 million) or more.
This year’s decline is the steepest since Nikkei began the survey in 1974.
Although Japan’s economy showed annualized growth of 4.8 percent in July-to-September, official data showed, the Nikkei said fears of another downturn are combining with the stronger yen to make companies cautious about spending.
While a number of companies recently upgraded their earnings forecasts, many firms — particularly big manufacturers in the auto and electronics industries — are tightening their belts, it said.
The total capital expenditure, worth ¥22.7 trillion, is also 2.7 percent less than what the firms surveyed had planned to spend at the start of the business year, the survey said.
The annual amount declined for the second straight year, following a 6.1-percent drop previously.
Capital spending by manufacturers is set to plunge by a record 26.1 percent in the current year, the survey said.
The decline in expenditure by other companies was only 6.2 percent but this is still the biggest drop since the 9.1-percent plunge in the year to March 2003 when the information-technology sector slumped.
Of the 17 manufacturing sectors, only the pharmaceutical and food sectors are investing more in plants and equipment. Drugmakers plan to spend 31.4 percent more.
The automobile, machinery and electric equipment sectors are cutting their capital spending by more than 30 percent.
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