Capital expenditure by Japanese businesses remained almost unchanged year-on-year in the first quarter of 2026, according to preliminary data released by the Japanese government on June 1.
Specifically, total investment in machinery, equipment, and other fixed assets (excluding land and intangible assets) across all enterprises (excluding finance and insurance) in the first three months of 2026 rose only 0.1% compared to the same period in 2025, significantly lower than the 3.6% increase recorded in the fourth quarter of 2025.
Analysts attribute the slowdown primarily to weak domestic demand and uncertainty about the global economic outlook, prompting many firms to delay or scale back new investment plans. Rising costs for raw materials and labor also squeezed profit margins, affecting decisions to expand production.
Capital spending data is a key indicator monitored by the Bank of Japan (BOJ) to assess economic health and adjust monetary policy. This result suggests Japan's economy remains in a slow recovery phase.
