Japanese companies delivered a robust performance in the July–September quarter, recording a near-20% rise in pre-tax profits as expanding investment in artificial intelligence and related infrastructure continued to bolster corporate earnings. Ministry of Finance data released on December 1 showed profits reaching JPY27.54 trillion ($177bn), according to Kyodo News, marking a fourth consecutive quarter of growth.

Manufacturers were a key driver of the upswing despite significant pressure in the transport equipment segment, where higher US tariffs weighed heavily and pushed pretax earnings down by 14%. Even so, manufacturing as a whole registered a 23.4% increase to JPY10 trillion, underpinned by sustained global demand for AI data-centre hardware and semiconductor production machinery Kyodo adds.

Service-sector firms also reported firmer results. Pretax profits among non-manufacturers grew 17.6% to JPY17.54 trillion, supported by higher customer traffic and increased per-capita spending across hospitality businesses. Construction companies posted particularly strong gains, with profits surging almost 50% on the back of large-scale building projects and the continued rise in construction costs.

Capital expenditure by non-financial companies climbed for a third successive quarter, rising 2.9% to JPY13.81 trillion. Technology-oriented firms expanded investment in digital infrastructure, while heavy industry groups channelled additional resources into decarbonisation initiatives.

Corporate sales edged up 0.5% to JPY379.04 trillion, extending an 18-quarter run of year-on-year increases. The data will feed into the forthcoming revision of Japan’s third-quarter GDP, initially estimated to have contracted at an annualised rate of 1.8% - the first decline in six quarters.