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Japan capital spending rises at fastest pace in decade in April-June

This photo taken on May 28, 2018, shows a production line operated by Mazda Motor Corp. at its plant in Hofu, Yamaguchi Prefecture, western Japan. (Kyodo)

TOKYO (Kyodo) -- Capital spending by Japanese companies rose at the fastest pace in more than a decade in the April-June quarter, government data showed Monday, adding to evidence that the economy has resumed growth after a temporary slowdown.

Investment by all nonfinancial sectors for purposes such as building factories and adding equipment increased by 12.8 percent from a year earlier, the Finance Ministry said, the seventh straight quarter of growth and the fastest since January-March 2007.

Such spending, which includes software outlays, came to 10.66 trillion yen ($96 billion) as chipmakers and automakers ramped up production capacity. Electric utilities also contributed by adding safety measures at nuclear power plants.

On a quarter-on-quarter basis, capital expenditure excluding software rose 6.9 percent.

The figures will be factored into revised gross domestic product data for the second quarter of 2018 to be released by the Cabinet Office on Sept. 10.

Preliminary GDP data showed the world's third-largest economy grew an annualized real 1.9 percent in the quarter, rebounding from a slight contraction in January-March.

Meanwhile, pretax profits at companies covered in the Finance Ministry's survey rose 17.9 percent from a year earlier to 26.40 trillion yen, a record high amid strong demand for chip-manufacturing equipment from the United States and China.

Sales climbed 5.1 percent to 344.61 trillion yen.

The ministry surveyed 32,330 companies capitalized at 10 million yen or more, of which 23,125, or 71.5 percent, responded.

In fiscal 2017, capital spending rose 5.8 percent to a record-high 45.45 trillion yen. Pretax profits grew 11.4 percent to 83.55 trillion yen, also an all-time high.

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