Japan corporate capital spending rises 1.6% in April-June

Japanese companies increased capital spending in the April-June quarter, offering support to domestic demand as policymakers assess the strength of the economy.

Spending on plant and equipment rose 1.6% from a year earlier, according to Ministry of Finance data. On a seasonally adjusted quarterly basis, capital expenditure increased 1.5%, following a nearly flat result in the previous quarter.

The data will feed into revised gross domestic product figures scheduled for September 8. It may also strengthen the case for the Bank of Japan to raise its policy interest rate at its next board meeting on September 18.

Preliminary figures released last month showed that Japan's economy expanded at an annualized 1.1% rate in the three months through June. Growth slowed from 1.9% in the previous quarter as household and business spending weakened.

Corporate sales rose 5.9% in the latest quarter, while recurring profit jumped 24.6%. Capital expenditure remains a key measure of growth driven by domestic demand. Japanese companies have continued to show appetite for investment in information technology, partly to address a persistent labor shortage in the country's rapidly aging population.

The government has pledged fiscal support to encourage private investment. It has identified artificial intelligence, semiconductors, advanced manufacturing and energy infrastructure as sectors important to long-term growth and productivity.