Japan’s [B]Capital Spending[/B] fell -21.7% in the year through the second quarter, rebounding from the record -25.3% annualized drop recorded in the first three months of the year. The non-manufacturing component of the metric was behind the improvement, where spending fell -14.2%, the least in a year, having declined -27.6% in the prior quarter. Capital spending for the manufacturing sector shrank -32.0%, accelerating from the -21.2% result noted in the previous period. On balance, this is somewhat encouraging: the non-manufacturing sector employs close to 66% of Japan’s labor force, so any signs that these firms are increasing capacity may translate into hiring, consumption, and ultimately boost economic growth. Still, it must be kept in mind that Japan’s savings rate stands at about twice that of the developed country average, so any improvement in the labor market will take considerable time to translate into spending growth.