FX.co ★ Japan Q1 Capital Spending Stalls

Japanese companies’ spending on plant and equipment was flat in Q1 2026 compared with a year earlier, a sharp slowdown from the 6.5% increase recorded in the previous quarter. This ended a four-quarter run of growth and pointed to waning momentum in corporate investment. Capital expenditure in the manufacturing sector fell 0.4% after stagnating in Q4, dragged down by weaker outlays in chemical products (-2.9%), fabricated metal products (-25.2%), business-oriented machinery (-8.6%), information and communication (-18.5%), and transport equipment (-7.6%). In contrast, non-manufacturing investment inched up 0.3%, supported by higher spending in wholesale and retail trade (2.1%), goods rental and leasing (37.6%), information and communication (6.2%), transport and postal activities (0.4%), and electricity production, transmission, and distribution (18.0%). The uneven results indicate that firms remained cautious and selective in their investment decisions amid a uncertain economic backdrop.