MNI BRIEF: Japan Q2 Capex Lower; GDP Seen Revised Down

Combined capital investment by non-financial Japanese companies excluding software rose 0.2% q/q in Q2 2025, slowing from 2.0% in Q1, a revised quarterly survey by the Ministry of Finance showed Monday.

The MOF survey, based on demand-side data, is a key input for calculating Q2 GDP revisions due Sept 8. It suggested capex will be revised lower from the preliminary +1.3%, which was based only on supply-side data.

Factoring in the MOF’s capex and inventory figures, the government is likely to revise down its estimate of Q2 real GDP from the preliminary +0.3% q/q, or an annualised +1.0%, unless other components are adjusted sharply.

Investment including software rose 1.6% q/q in Q2 after +1.9% in Q1, and was up 7.6% y/y, the second consecutive rise after +6.4% in Q1.

Bank of Japan officials are focused on the September Tankan survey due Oct 1 to assess the impact of tariffs on corporate profits and business plans, particularly capex. While demand for investment to ease labour shortages remains firm, global demand uncertainty is prompting some firms to delay implementation.

The MOF survey also showed manufacturers’ current profits fell 11.5% y/y, the second straight drop after -2.4% in Q1, reflecting tariff pressures and clouding the outlook for solid capex.