TOKYO (Kyodo) -- Pretax profits at Japanese companies in the July-September period rose 19.7 percent from a year earlier to 27.54 trillion yen ($177 billion), marking a fourth straight quarterly increase, driven by strong demand in the field of artificial intelligence, the Finance Ministry said Monday.

Although pretax profits in the transportation equipment sector tumbled 14.0 percent due to higher U.S. tariffs, among manufacturers as a whole they climbed 23.4 percent to 10 trillion yen on robust demand for AI data centers and semiconductor-making equipment.

Nonmanufacturers reported a 17.6 percent increase in pretax profits to 17.54 trillion yen, boosted by increased customer numbers and average spending at restaurants and accommodation facilities.

In the nonmanufacturing sector, construction companies saw a 48.6 percent surge in pretax profits on large-scale projects and rising construction costs, the ministry said.

In the third quarter of 2025, capital spending by all nonfinancial sectors for purposes such as building factories and purchasing equipment grew 2.9 percent to 13.81 trillion yen, rising for the third consecutive quarter.

Among the sectors that boosted investment, information and communication service providers expanded AI-related capacity and steel companies advanced decarbonization efforts, the ministry said.

Takafumi Fujita, an economist at the Meiji Yasuda Research Institute, said Japanese companies managed to withstand the negative impact of U.S. trade policy in the July-September period.

The Japanese and U.S. governments agreed in July to lower vehicle duties to 15 percent from 27.5 percent imposed earlier by President Donald Trump, with the new rate taking effect in mid-September.

"It is encouraging that we saw solid results in growth areas," Fujita said, pointing to robust performances in sectors such as AI and semiconductors.

Sales grew 0.5 percent to 379.04 trillion, up for the 18th straight quarter.

The latest figures will be used to revise Japan's gross domestic product data for the July-September period showing the economy shrank an annualized real 1.8 percent, marking the first contraction in six quarters.

The Cabinet Office will release the revised GDP data next Monday.

For the reporting quarter, the ministry surveyed 26,574 companies capitalized at 10 million yen or more, excluding those in the banking and insurance sectors, of which 19,255, or 72.5 percent, responded.