Rise in Japan's Q1 capex undercut by pandemic-driven profit slump

Japan's factory activity shrank at the fastest pace in over a decade in May, a separate private sector survey showed on Monday.

The finance ministry's data will be used to calculate revised gross domestic product figures due June 8. The initial estimate showed an annualised 3.4% economic contraction in January-March - analysts expect a less steeper contraction in revised GDP.

The latest MOF survey drew fewer respondents than usual, as the pandemic forced many businesses to close, the ministry said, adding it will be revising the data later by extending the May 10 deadline for respondents by two months.

Takumi expects capital spending to be downgraded as firms that delayed their responses likely included those most affected by the outbreak.

Read Also: FBI's top lawyer resigns as agency faces pressure from Trump

Capital expenditure gained a seasonally adjusted 6.7% quarter-on-quarter in January-March, the survey showed.

Manufacturers' business spending rose 0.6% from a year earlier, according to the survey, conducted among firms with capital ranging from 10 million yen (US$ 92,876) to 1 billion yen or more. It followed a 9.0% drop in the previous quarter.

Corporate recurring profit tumbled 32.0% in the January-March quarter year-on-year, the biggest drop since July-September 2009, due to declining demand for cars and other transportation goods.

Sales fell for the third straight quarter, down 3.5 on-year and followed the fourth quarter's 6.4% decline.