MNI BRIEF: Japan Q1 Capex Higher; GDP Seen Revised Up

Combined capital investment by non-financial Japanese companies excluding software rose 1.8% quarter-on-quarter in Q1, up from a 1.3% increase in Q4, a quarterly survey released Monday by the Ministry of Finance showed.

The MOF survey, based on demand-side data, is a key input for GDP revision calculations and points to an upward revision of Q1 capex from the preliminary estimate of +1.4%, which was derived from supply-side data alone.

Based on the MOF data on capex and inventories, the government is likely to revise Q1 real GDP higher from the preliminary -0.2% q/q, or an annualised -0.7%, barring large revisions in other components.

Including software, total capex rose 1.6% q/q in Q1, following a 1.3% increase in Q4. On a year-on-year basis, capex including software rose 6.4%, the first annual increase in two quarters after a 0.2% decline in Q4, the first drop in 15 quarters.

The expected upward revision supports the Bank of Japan’s view that investment demand, particularly related to labour shortages, remained solid through Q1.

BOJ officials are also watching closely to assess how uncertainty in global demand stemming from U.S. trade policies influences corporate capex plans.