TOKYO (AFX-ASIA) - The Ministry of Finance said the rise in corporate investment in new plant in the third quarter was surprising, though the outlook for capital spending will be affected by continued weak sentiment. The relatively brisk demand for machinery for the second quarter to June also helped boost the capital expenditure number, a ministry official noted. Overall corporate investment in new factories and equipment totalled 10.72 trln yen for the third quarter to September, up 0.5 pct from a year earlier. Private-sector economists had earlier predicted that third quarter capex would decline between 1.3 and 3.0 pct. The ministry said investment in software for all companies stood at 520.1 bln yen in the quarter and, including these outlays, overall capex would have rise to 5.4 pct. Software investment is currently excluded from the main data. "The outlook for capital spending will be affected by future economic conditions, given that business sentiment for the fourth quarter, as well as profit and sales forecasts, show a sharp fall," the official said. Capital outlays in the manufacturing sector fell 2.7 pct in the third quarter, the first decline in six quarters, due to the impact from the information technology-related machinery sector on sluggish demand from in US. Non-manufacturing capital spending rose 2.4 pct in the same period, the first gain in three quarters, helped by the strength in service industries. Pretax profit in all industries for the third quarter dropped sharply, by 32.5 pct, as the manufacturing sector showed a sharp deterioration of 53.4 pct. Private-sector economists had earlier forecast pretax profit would fall by between 8.0 and 25.0 pct year-on-year. "Among manufacturers, the IT-related machinery sector continues to be weak. In the non-manufacturing area, construction and real estate companies saw losses due to decreasing sales activity," the ministry official said. "The pretax profit for the period were not yet affected by the terrorist attacks," the official added.