Capital investment to rise 0.6% in FY 2001: survey.

TOKYO, Sept. 18 Kyodo

Growth in capital investment by major Japanese companies in fiscal 2001 will slow, rising 0.6%, compared with a 4.1% gain in the previous year, the governmental Development Bank of Japan (DBJ) said in a survey released Tuesday.

The survey, conducted in August, showed that deceleration in the U.S. economy, combined with the global slump in information technology (IT) businesses, have made the major firms reluctant to spend more, with capital spending in the electric machinery sector likely to fall 6.3%, compared with a 38.7% jump in the previous fiscal year.

While capital investment will enter into an adjustment phase, the terrorist attacks in the United States are likely to hit exporters in particular, the DBJ predicted.

Capital spending in the manufacturing sector will rise 6.2% in the reporting fiscal year through March 31, boosted mainly by a 9.8% gain in the automobile industry, which will invest in the development of new model cars.

Chemical manufacturers are expected to spend 15.4% more, up for the second straight year, in order to launch high value-added products, the DBJ said.

Meanwhile, spending in the nonmanufacturing sector is likely to decline 2.0%, it said.

Investment in next-generation mobile phones will see the telecom and information sector spend 6.1% more, but the wholesale and retail industry will spend 22.2% less after companies in this category rushed to set up their outlets in the previous fiscal year prior to an enforcement of the Large Scale Retail Stores Location Law.

Spending by the real estate sector will fall 30.6%, reflecting a decline in local development projects, the DBJ said.

In fiscal 2002 starting next April 1, overall capital investment will rise 1.4%, with the manufacturing sector down 9.2% and the nonmanufacturing sector up 3.4%, the DBJ said.