GDP Capital Expenditure QoQ

GDP Capital Expenditure QoQ is the quarterly change in Private Non-Residential Investment, the business-investment part of Quarterly Estimates of GDP. It captures private fixed spending, or purchases of lasting assets, on machinery, nonresidential structures, research and development and software. It also covers programs built for own use, entertainment masters such as film and music originals, and brokerage fees for nonresidential property.

It covers private companies, financial firms and family businesses, plus equipment of nonprofits serving households, but excludes housing, public works, stock changes and government consumption. It measures actual spending booked in the quarter, not investment plans, and it is a compiled series, not a survey with a sample.

Each release covers 1 calendar quarter in 2 estimates. The 1st comes about 6 to 7 weeks after the quarter ends and the 2nd about 2 to 3 weeks after the 1st.

Releases appear at 8:50 AM Japan time. The 1st uses data available on the balance of payments day for the third month. The 2nd uses data available on the company accounts day, with missing months extrapolated. Dates may change with source schedules.

Each release posts summary GDP tables, a technical note, seasonal-adjustment details, historical tables and CSV files. The 2nd estimate replaces the 1st with company data, every release revises adjusted series back to 1994Q1, and readers should use the newest figures.

Capital expenditure moves with machinery demand, building activity and spending on software and research.

• Parallel-estimated equipment and structures, 60%: machinery and building investment blended from production data and company accounts under the 2020 base.
• Common-estimated knowledge and fee items, 40%: research, software, entertainment masters, property fees and nonprofit equipment, each from its own source under the 2020 base.

In Q4 2023 the 1st estimate released February 15, 2024 showed GDP at -0.1% and capital expenditure at -0.1%. The GDP annualized rate was -0.4% and the capital expenditure share was -0.0pt.

The 2nd estimate released March 11, 2024 added company accounts and revised capital expenditure to +2.0% with a share of +0.3pt. Headline GDP flipped to +0.1% with an annualized rate of +0.4%, while consumption eased from -0.2% to -0.3% and housing stayed at -1.0%. The lesson is that the 1st figure uses production data only and the 2nd can reverse both the part and the whole.

1. Demand-side company estimate: equipment of firms, financial firms and family businesses is summed from quarterly accounts, with break adjustment by capital class. Small firms are added by annual ratio with the Lisman-Sandee method.

1. Supply-side production estimate: total fixed investment from goods flows minus public works, housing and research, software and fee items.

1. 1st-estimate workaround: company accounts are not yet ready, so the 1st release builds a stand-in company figure from the production trend.

1. Blending formula: integrated spending = k times company estimate plus (1 minus k) times production remainder after public works. k, or blending share, is 0.4901 under the 2020 base and 0.4522 under the 2015 base.

1. Price adjustment: nominal values, or yen before price correction, are split by price indexes into real values, or inflation-adjusted yen. The total deflator is implicit and Paasche-type, real series use Laspeyres-type chain-linking, which limits substitution bias, or distortion from shifting buying.

1. Growth and seasonal adjustment: quarterly change is 100 times the quarter-to-prior ratio minus 1, and each part contributes its prior spending share times its change. Gaps are spread in proportion. Seasonal adjustment, or removing normal seasonal swings with the X-12-ARIMA statistical program, is rerun back to 1994Q1, with yearly equivalents in brackets.

1. Illustrative example: with a company estimate of 100.0 trillion yen and a production remainder of 98.0, spending is 99.0 using the 2020 weight. From 97.0 the prior quarter, growth is about +2.1% and the GDP share is about +0.4pt on GDP of 550 trillion yen.