Publication of Survey on Planned Capital Spending for FY2025
Sustained Double-digit Growth amid Uncertainties:
Growth Falling from Above-bubble-economy Level in Non-manufacturing, While Staying Robust in Manufacturing
The Development Bank of Japan Inc. (DBJ) is pleased to announce the publication of the findings of the Survey on Planned Capital Spending for FY2025.
The results of the survey point to a continued double-digit increase (up 14.3%) in planned domestic capital spending by major companies in FY2025, despite falling below 20% for the first time in four years due to uncertainties about US tariff hikes, among others. The manufacturing sector continues to grow strongly at 21.0% driven by continued investment in automobile electrification (including hybrid vehicles) and spending for decarbonization mainly in materials-based industries, while investment in the non-manufacturing sector shows a slowdown to 11.3%, largely due to the extraordinary growth last year. By region, substantial increases are planned in Hokuriku, Hokkaido and Tokai, among others.
Our findings also reveal the following characteristics regarding corporate behavior:
- Although the impact of tariff hikes by the US administration has not become apparent, there are significant moves to reduce operations in China. Firms curtailing their business operations in China are also tending to diversify supply chains including in Japan. Planned capital spending overseas for FY2025 shows slower growth than investment in Japan, attesting to the continued downtrend of the overseas investment ratio.
- Many companies regard price inflation and labor shortages as risk factors. Although large- and medium-sized firms both continue to raise wages and pass the rising cost on to prices, wage hikes have been slowing. Efforts to raise share prices are increasingly focused on initiatives pertaining to business activities, such as review of business portfolio. Capital spending in a broad sense points to a continued increase in the share of investment in human resources.
- Wage increases are tending to accelerate as a means of investing in human resources to help recruit talent. Companies are still proactively investing in digitalization as an alternative to recruiting talent.
- Spending on digitalization has remained strong since the Covid-19 pandemic. Although the use of artificial intelligence (AI) is expected to rise further, accompanied by initiatives for data analysis, companies face difficulties in finding ways to utilize data. Spending on research and development continues to increase rapidly, including for decarbonization.
- As efforts for decarbonization continue to gain ground steadily, how to pass on the related cost is becoming the biggest issue. Energy conservation and renewable energy remain the focus of ongoing efforts, but new technology has been gaining more attention as a longer-term alternative, particularly for new energy sources such as hydrogen and ammonia.
- By region, substantial increases are planned for FY 2025 in Hokuriku, Hokkaido, and Tokai, among others, all showing double-digit growth. While many medium-sized firms recognize labor shortages, succession planning and rising labor costs as risk factors, they see more growth opportunities than large-sized firms in policy revisions both inside and outside Japan.
More details on the survey are available in the attached PDF.
Please note that no information regarding individual firms will be provided by DBJ, as the survey is conducted under conditions of confidentiality and anonymity.
DBJ's reports are one of the ways in which it fulfills its corporate philosophy of "Design the Future with Financial Expertise: Continue to expand financial frontiers; Provide the best solutions for customers and society; Pursue sustainable development for Japan and the world."
Inquiries:
Chief Research Office
Economic & Industrial Research Department
E-mail: capex@dbj.jp(national data)
E-mail: rpinv@dbj.jp(regional data)