While business investment in the previous quarter (April-June) clearly stagnated, expectations are emerging for a rebound in the July-September quarter, and the Financial Statements Statistics of Corporations by Industry are also prompting speculation of an upward revision. Investment plans by domestic manufacturers are also coming to light in succession.
While the preliminary GDP figure for the previous quarter showed growth of 0.3% quarter on quarter, private consumption was flat and business investment contracted, suggesting sluggish domestic demand.
However, the leading nature of the machinery orders statistics is pronounced, and some analysts see them as signaling that business investment may have bottomed. Business investment in the July-September quarter is expected to remain firm. The Financial Statements Statistics of Corporations by Industry indicate that business investment in the previous quarter may be revised upward to growth of 1.5% quarter on quarter, while an expansion in capital goods shipments and a recovery in machinery orders have also been cited.
Companies seeking to expand domestic demand have announced a succession of investment plans. Kioxia Holdings and SanDisk announced domestic investment plans totaling approximately ¥5 trillion. Kyocera opened a new plant in Nagasaki, while NGK is planning to build a new plant in Nomi City, Ishikawa Prefecture, with an investment of approximately ¥70 billion.
Expanded domestic investment, including in regional areas, could have spillover effects on employment and surrounding industries, and is expected to influence domestic demand going forward.