• News Release
• Sep 19, 2000
• Development Bank of Japan

Positive Growth for the First Time in Four Years,
Mainly in Manufacturing:
Information technology's ripple effect on investment

1. Planned capital spending for FY2000 will increase in both the manufacturing sector (up 15.2%) and the non-manufacturing sector (up 0.2%), the first overall industrial increase in four years (up 7.6%).
2. In the manufacturing sector, there will be broad spending increases for electric machinery, because of capacity expansion for semiconductors and liquid crystals, as well as higher spending in precision machinery, non-ferrous metals, cement, ceramics & glass, automobiles, and chemicals, resulting in the first spending increase in the manufacturing sector in three years. In contrast, food & beverages and iron & steel will fall sharply from the large-scale investment levels of the prior year, and tight spending controls will decrease capital investment in petroleum. In the non-manufacturing sector, overall spending will increase for the first time in four years. Spending in the telecommunications and information sector will rise, corresponding to increase in demand for advanced systems. Increases are also planned in both railways for new lines and line extensions, and in wholesale and retail for accelerating new store openings before enactment of the Large-Scale Retail Store Siting Law. Spending will also increase in electric power and leasing.
3. Looking at the different investment motives within the manufacturing sector, there are planned increases in ・xpansion of production capacity', ・roduct development and upgrading' and ・esearch and development' for both materials industries and processing and assembly industries. In particular, capital spending for ・xpansion of production capacity' will increase at a high level for the first time since 1995 because of demand for electric machinery and precision machinery.
4. Investments in information technology (a new survey item) will grow by double digits, exceeding the growth rate of overall capital spending.
5. Both manufacturing and non-manufacturing will return to spending increases, with some exceptions among sectors, so capital spending is making good progress. Capital Spending in electric machinery has largely been revised upward led by electronic parts. Along with precision machinery, increases will also be seen in related industries : cement, ceramics and glass, which have seen revived investment activity since the previous survey; non-ferrous metals for wafers, etc.; general machinery for digitization of offices; and household machinery. Information technology's ripple effect on investment will intensify and telecommunications and information industry will return to growth because of spending for cellular telephones and advanced systems. On the other hand, the outlook in large industries will continue. The underlying tone of investment in the automobile and chemical industries will still essentially be one of restraint, although there will be some increase, and spending in electric power sector may shift downward. Thus, the disposition for investment is mixed throughout the various sectors, and spending increases in wholesale & retail are specifically tied to an acceleration in new store openings ahead of the Large-Scale Retail Store Siting Law.

Survey on Planned Capital Spending for FY 99, 00 and 01 (Summary)