Corporate Financial data for nonfinancial corporations was published today and can be found in the Financial Section of Haver's Japan data base.

Profits before taxes for nonfinancial corporations in Japan rose 12.26% in the first quarter from the fourth quarter of last yearand were 4.05% above the first quarter of 2005. Profits as a percentage of sales reached are at an historically high level. To put the current data in perspective, we show, in the first chart, annual profits before taxes as a percentage of sales for the last fifty years. We use the annual data because of the seasonality in the quarterly data. In 2005, the percentage was 3.6% a figure not seen since the sixties and seventies. In the first quarter of this year, the ratio was 4.2%

Reflecting the improved profitability, nonfinancial corporations have stepped up capital spending. The excess of capital spending over depreciation allowances continues to grow as can be seen in the second chart. In the first quarter, capital spending increased 29.07% over the fourth quarter of last year and was 13.93% above the first quarter of 2005.Again, in view of the seasonality of the data, the year to year comparison is the more meaningful.