Development Bank of Japan

  • News Release
  • march 21, 2000
  • Development Bank of Japan

Capital Spending Bottoms Out:
Driven by Electric Machinery

  1. Planned capital spending for FY 2000 will increase in both the manufacturing sector (up 0.3%) and the non-manufacturing sector (up 0.2%), the first overall industrial increase in four years (up 0.2%).
  2. In the manufacturing sector, investment will increase substantially in electric machinery mainly because both domestic and foreign demand for semiconductors and liquid crystal displays has become greater. This helps spur rises in other industries such as Precision Machinery, and Cement, Ceramics & Glass. On the other hand, investment will remain sluggish in Automobiles, which has a ripple effect on other industries, and in Chemicals, which represents a large portion of materials sector spending. There will be big drops in Food & Beverages and Iron & Steel after large-scale investment in the previous year.
  3. In the non-manufacturing sector, investment will decrease in Telecommunication & Information, industry that boosted overall investment in the previous boom. And there is a possibility of downward revision in Electric Power which now plans an increase, under the pressure of higher demand for efficient management. The overall tone remains weak in this sector.
  4. Looking at the investment motives for the manufacturing sector, there are increases in "Expansion of Production Capacity", "Product Development and Product Upgrading" and "Research & Development", for both the materials industry and the processing & assembly industry. But "Expansion of Production Capacity" decreases and remains at a low level in such industries as Automobiles and Chemicals.
  5. Even though there are slight increases in planned capital spending for FY 2000 in both the manufacturing sector and the non-manufacturing sector, the driving forces are only a few industries in the manufacturing sector. Looking at respective firms, in the manufacturing sector, attitudes on spending are different from the previous year, which was also enveloped in a mood of restraint. For instance, even in industries that plan to restrain or decrease total spending, some firms will invest in reorganization to improve the production efficiency. In the non-manufacturing sector, investment related to information technologies seems strong even though its share to the total investment is relatively small. This is due to higher demand for cellular phones with better services, expectation of the higher demand for information devices in Leasing and new information technology services in Wholesale & Retail.

(Target Firms and Survey Methods)

Survey Method: Questionnaire
Date of Survey: February 10, 2000
Target Firms: 3,439 private firms in Japan's major industries capitalized at JPY 1 billion or mor
Proportion of Valid Responses: 86.2% (2,965 firms)
Industrial Classification for the Totals: Investment-specific Classification as a rule, Principal Business Classification in some parts of the analysis.

Planned Capital Spending for FY 2000
(Acrobat R4.0JFormat)