The Japanese business world has 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 dipped for the first time in eight quarters.
The Finance Ministry says combined ordinary profits came to 22.3 trillion yen, or about 165 billion dollars.
That's a 2.8 percent decrease in yen terms from a year earlier.
Manufacturers, including producers of food, chemicals, and oil and coal, saw earnings plunge by 15.7 percent as the cost of raw materials and energy rocketed.
Firms in the non-manufacturing sector fared better. Companies related to transport and other service businesses saw profits jump 5.2 percent, partly due to a government subsidy program to promote domestic travel.
Meanwhile, capital spending grew almost 7.7 percent from the same period last year. Investment in the manufacturing sector rose 6 percent, and in non-manufacturing by more than 8.6 percent.
The ministry says manufacturers are ramping up their production capacity and investing in digital transformation as they prepare for a post-pandemic surge in demand.