In fiscal 2025, ordinary profit at Japanese companies reached a record high, while the labor share, or the proportion of value added accounted for by labor costs, fell for the fifth consecutive year to 63.0%. Capital investment and profit also increased on a quarterly basis.
According to the fiscal 2025 Financial Statements Statistics of Corporations, ordinary profit across all industries excluding finance and insurance rose 8.8% from the previous fiscal year to ¥124.8313 trillion. It reached a record high for the fifth consecutive year since comparable data became available in fiscal 1960. Net sales rose 1.6% to ¥1,720.2560 trillion, while capital investment increased 4.3% to ¥57.8999 trillion, with both reaching record highs. Labor costs rose 2.6% to ¥235.2869 trillion, but despite the increase in sales, the labor share fell to 63.0%, down 1.2 percentage points from 64.2% in the previous fiscal year.
By industry, information and communications equipment and electrical machinery recorded particularly strong profit growth, driven by demand for AI and data centers. Service industries such as food service and the construction industry also increased profits, while food products expanded sales as a result of price revisions. In capital investment, chemicals and production machinery stood out, with investment to expand production capacity for semiconductors and pharmaceuticals pushing up the overall figure. Real estate and electric power also posted notable increases.
Investment also expanded on a quarterly basis. In the April-June 2026 quarter, capital investment rose 1.6% year on year to ¥13.0250 trillion, net sales increased 5.9% to ¥393.9377 trillion, and ordinary profit climbed 24.6% to ¥44.6668 trillion, with profit growth particularly pronounced on a quarterly basis. By industry, capital investment in manufacturing fell 3.7% year on year, in contrast to a 4.7% increase in non-manufacturing.
Capital investment is attracting attention as a key data point for compiling the second preliminary estimate of GDP, and the government is scheduled to release the second preliminary GDP estimate for the April-June quarter on the 8th. Analysts have pointed out that as long as the labor share continues to decline, the strong performance of companies could remain a recovery that is not felt by households.