Business investment by Japanese firms rises 3.4 pct on year in Q1

TOKYO, June 1 (Xinhua) -- Business investment by Japanese firms increased in the January-March quarter from a year earlier, government data showed Friday.

According to the Finance Ministry, capital spending by companies here rose 3.5 percent in the first quarter of the year, in a sign that domestic demand may be rebounding.

Leading economists said the latest capital spending figures could lead to a moderate upgrade to Japans growth rate in the same period, which initially showed the economy shrunk an annualized real 0.6 percent, halting an eight-quarter phase of expansion.

Investment in non-financial sectors increased for a sixth straight quarter totaling 14.77 trillion yen (135.33 billion U.S. dollars) in the recording period, the ministry said, while capital spending by manufacturers increased 2.8 percent to 4.85 trillion yen (44.44 billion U.S. dollars) in the January-March quarter from a year earlier.

Business spending across all industries excluding spending on software, inched down 0.02 on a seasonally adjusted basis, the government's data showed, while pretax profits at companies hit a record high for the first quarter, rising 0.2 percent from a year prior to 20.17 trillion yen (184.81 billion U.S. dollars).

The Finance Ministry said that non-manufacturers surveyed posted a 5.0 percent gain in pretax profits, helped by rising commodity prices, but manufacturers pretax profits slumped for the first time in six quarters by 8.5 percent, owing to a comparatively firm yen.

The ministrys survey covered 31,156 companies across Japan with a capital of 10 million yen (91,000 U.S. dollars) or more.

The survey, which also revealed that sales in all sectors were up 3.2 percent at 361.78 trillion yen (3.31 trillion U.S. dollars) in the recording period, received a 72.8 percent response rate. Enditem