TOKYO: Capital spending by Japanese businesses increased for the fourth consecutive quarter in the first three months of 2022, the government reported on Wednesday, noting that spending on digital and green technologies had increased.

In a report, Japan’s finance ministry said spending rose 3% from January to March year on year, with investment from all non-financial sectors totaling 14.9 trillion yen ($115.17 billion). .

Capital spending in manufacturing jumped 5.9% to 4.9 trillion yen ($37.86 billion). This was attributed to increased spending in the transportation equipment industry as automakers spent more on digital technologies as part of goals to help the East Asian country reach the carbon neutrality.

Business spending in the non-manufacturing sector rose 1.6% to 10 trillion yen ($77.27 billion) after property companies signed more contracts, wholesalers pushed to promote more digitization and retailers unveiled their intention to open new stores.

“Business investment by manufacturers has largely recovered to pre-pandemic levels, while investment by non-manufacturers remains weak,” a ministry official quoted in the report said. “The Japanese economy is recovering, although some businesses are still affected by the fallout from the coronavirus pandemic.”

Tokyo has pledged to make its society carbon neutral by 2050, with many companies and conglomerates becoming less dependent on fossil fuels in favor of renewable energy.

“Environmental measures will continue to be one of the factors to increase business investment,” the official said.

The report also said corporate profits and pre-tax sales have ballooned, in part due to soaring fuel and commodity prices following Russia’s invasion of Ukraine.

Ministry data showed pre-tax profits rose 13.7% to 22.8 trillion yen ($176.16 billion), helped by growth in the chemicals industry, as rising costs raw materials began to be passed on by petrochemical manufacturers to their consumers and increased their profits.

Oil wholesalers also posted growth, with sales up 7.9% to 360.8 trillion yen ($2.78 trillion), also driven by chemical makers and wholesalers.

The Cabinet Office will release its revised gross domestic product (GDP) data for the same quarter on June 8, based on the latest capital expenditure figures.

Preliminary GDP data showed Japan’s economy contracted an annualized 1% in the first quarter as personal consumption was zapped by Covid-19 restrictions, which also inhibited economic activities in the country.

Takeshi Minami, chief economist at the Norinchukin Research Institute, predicts GDP will be revised slightly lower, with capital spending rising just 0.3% in the last quarter of 2021 on a seasonally adjusted quarterly basis.

The ministry surveyed 32,112 companies with capital of 10 million yen ($77,200) or more.