Nikkei projection: Japan’s capital spending to increase for fifth straight year in 2007

May 26, 2007
By Ken Worsley

Last year, capital spending by Japanese firms increased by 12.6%, showing a rise for the fourth consecutive year. Today, the Nikkei announced its projection that capital spending in Japan will again increase in 2007, though not at the same blistering pace as last year. The Nikkei is projecting an 8.7% rise this year.

The Nikkei’s projection is based on a survey of 1,556 companies located both in Japan and overseas. Major growth is expected from the shipbuilding industry, which is expected to increase capital spending by 41.1 percent, after having seen a decline of 15% last year.

The big news of the Nikkei’s report is that non-manufacturers are expected to spend more than manufacturers in 2007. The Nikkei projects a 9.8% increase for non-manufacturers and an 8% increase amongst manufacturers.

In its April report on the state of Japan’s economy, the Cabinet Office said machinery orders, which are viewed as a leading indicator of corporate capital spending, are forecast to fall 11.8% in the second quarter of 2007.

Filed Under Capital Spending