By Tetsushi Kajimoto
TOKYO (Reuters) -Japanese corporate spending on plant and equipment in October-December jumped by 16.4% from the same period a year earlier, Ministry of Finance data showed on Monday, likely easing some concerns about weak domestic demand.
The data will be used to calculate revised gross domestic product figures due on March 11 and follows a preliminary estimate that Japan’s economy contracted by 0.4% on an annualised basis in the fourth quarter.
Policymakers are counting on hefty wage hikes at major firms to spread to small firms that employ the bulk of workers and a slew of subsidies and tax cuts to boost domestic demand.
Japan unexpectedly slipped into a recession at the end of last year. Still, speculation is rife that the central bank will begin to exit its negative interest rates policy as early as this month or next.
The solid capex data could bolster the case for normalising monetary policy, while many analysts pay attention to the outcome of annual wage negotiations to confirm a virtuous cycle of pay rises and sustainable inflation to fall in place, which is a prerequisite for terminating negative interest rates policy.
Capital expenditures rose 16.4% in the fourth quarter from a year earlier, and grew 10.4% on a seasonally adjusted quarterly basis, the MOF data showed
Monday’s MOF capex data also showed corporate sales rose 4.2% quarter on quarter, and recurring profits increased 13.0% in the October-December quarter from the same period a year ago.
(Reporting by Tetsushi Kajimoto; Editing by Josie Kao and Stephen Coates)
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