Japan’s capital spending rebounds in 4Q

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Capital spending in Japan looked in solid shape during the final three months of 2016, with data this morning showing the fastest pace of growth in three quarters.

Capital investment grew 3.8 per cent year on year in the three months to December 31, rebounding from a 1.3 per cent contraction in the September quarter. The result far surpassed the 0.8 per cent growth pencilled in by economists in a Bloomberg survey and was also the quickest pace since the March quarter of 2016.

Capital spending excluding investment in software grew 3.3 per cent year-on-year in the December quarter, also rebounding from a contraction in the previous three-month period and likewise beating economists’ forecasts.

The pace of spending in 2016, although solid, wasn’t as good as 2015, when each quarter posted growth in excess of 5 per cent. This was partly borne out by GDP data early in February, which showed the Japanese economy grew by a slower-than-expected seasonally-adjusted pace of 0.2 per cent in the December quarter.

The yen has been weakening in morning trade, sitting 0.4 per cent softer at ¥‎113.17 per dollar and on track for a third straight day of declines.

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