Japan’s business world hit a speed bump as the manufacturing sector failed to keep up with the pace of growth. Combined pre-tax profits in the October-December period fell for the first time in eight quarters.
The Finance Ministry says combined current profits reached 22.3 trillion yen, or about $165 billion.
That’s down 2.8 percent in yen terms from a year earlier.
Manufacturers, including food, chemical, oil and coal producers, saw profits fall 15.7 percent as raw material and energy costs skyrocketed.
Companies in the non-manufacturing sector fared better. Companies related to transportation and other services saw profits rise 5.2 percent, partly due to a government subsidy program to boost domestic travel.
Meanwhile, capital spending rose by nearly 7.7 percent compared to the same period last year. Investments in the manufacturing sector increased by 6 percent and in the non-manufacturing sector by more than 8.6 percent.
The ministry says manufacturers are increasing their production capacity and investing in digital transformation as they prepare for a post-pandemic surge in demand.