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03/05 21:04
Japan 4th-Qtr Capital Spending Falls; Profits Plunge (Update2)
By Yoshiko Matsushita, with reporting by Ann Saphir and Daisuke Takato
Tokyo, March 6 (Bloomberg) -- Japan's companies slashed spending on factories and equipment in the fourth quarter, the first drop in two years, prompting economists to forecast an even wider contraction in the world's second-biggest economy.
Capital spending fell 14.5 percent in the three months ended Dec. 31 from a year ago, the Ministry of Finance said. In a sign companies have been slow to trim costs and may have to make further cuts, profits fell 31.4 percent, even though sales fell just 3.8 percent.
The biggest decline in spending in three years ``was a surprise, and we're definitely lowering our GDP forecasts,'' said Taro Saito, an economist at NLI Research Institute. He revised his forecast to a 1.6 percent decline from an initial estimate of a 0.2 percent drop. ``Japan's economy was in a very bad shape all last year.''
The decline was led by electrical machinery makers such as NEC Corp., Toshiba Corp. and Fujitsu Ltd., which have delayed expansion plans after sales to the U.S. and Asia dropped.
Today's report prompted seven of 10 economists contacted to lower their forecasts for fourth-quarter gross domestic product. The report, to be released Friday, is expected to show the economy shrank for a third quarter in the final three months of last year, the longest slide in GDP in the post-war period.
The median of the seven forecasters dropped to a 1.3 percent decline in GDP, from an initial forecast of a 0.2 percent drop. |
