Japanese companies cut investment

Japanese firms had a tough first quarter

Japanese firms cut their capital spending by a record level in the first quarter of 2009, a survey has said.

Firms cut spending on plant and equipment by a quarter during January to March, according to the survey by Japan's finance ministry.

The 25% decline from the same period a year earlier, followed a 17% fall in October to December last year.

The Japanese economy contracted by a record annual rate of 15% during the first quarter of 2009.

However, analysts expect it to grow very slightly between April and May, and July to September, as global trade starts to recover.

'Weak'

JP Morgan economist Masamichi Adachi said analysts had expected an even bigger fall in capital spending.

"The figures were weak but not as poor as some had feared," he said.

Japan has been one of the major economies worst hit by the global recession.

Its export firms have been particularly affected by the drop in worldwide consumer spending.