Japan's corporate investment slows

Japanese corporate capital expenditure rose for an eighth consecutive quarter in July-September but the pace of gains slowed sharply, raising doubts about the strength of business activity amid global trade frictions.

Ministry of Finance (MOF) data out on Monday showed capital expenditure grew 4.5 percent in July-September from the same period last year, led by chemicals, production machinery, information and communications. It slowed from a 12.8 percent gain in the previous quarter.

Excluding software, capital expenditure fell 4.0 percent in July-September from the previous quarter on a seasonally-adjusted basis, down for the first time in five quarters.

Economists said the data, which will be used to calculate revised gross domestic product figures due on Dec. 10, pointed to a downward revision to the third-quarter GDP.

“The July-September GDP contraction will likely turn out deeper than initially estimated,” said Toru Suehiro, senior market economist at Mizuho Securities.

 “There may be a temporary rebound from the slump caused by natural disasters, but external demand remains sluggish due to slowing global growth, which will dash hopes for strong recovery.”

Capital expenditure has been a bright spot in the world's third largest economy, as companies refurbish their old equipment and boost investment in automation and labour-saving technology to cope with labour shortages in an ageing society.

A preliminary estimate out last month showed Japan's economy contracted by an annualised rate of 1.2 percent in the third quarter due to natural disasters and sluggish external demand.