Japan machinery orders rise more than expected, government welcomes pick-up signs
TOKYO: Japan's core machinery orders rose for a second
straight month in November, government data showed on Monday (Jan 17), a sign
that corporate appetite for capital spending remained resilient despite
pressure from soaring raw material prices.
The gain in core orders, a key indicator of capital
expenditure, could be a relief to policymakers hoping for corporate investment
to trigger a private demand-led recovery in the world's third-largest economy.
Core orders, a highly volatile data series regarded as an
indicator of capital spending in the coming six to nine months, grew 3.4 per
cent in November from October, rising for the second straight month, the
Cabinet Office data showed.
It beat economists' median estimate of a 1.4 per cent rise
and followed a 3.8 per cent jump in the previous month.
However, Japanese firms could be cautious about boosting
spending due to higher raw material, fuel and transportation costs that are
sending wholesale inflation soaring and squeezing corporate margins.
"Firms may postpone capital spending from this quarter
into the next fiscal year from April as uncertainty in the global economy has
risen," said Takeshi Minami, chief economist at Norinchukin Research
Institute.
"Due to a decline in coronavirus cases and an easing of
the (global) chip shortage, orders from manufacturers recovered up to November,
but the outlook is unclear."
A government official confirmed firms' appetite for capital spending faced risks from rising raw material prices, though he added companies were still likely to spend on investments to strengthen their businesses for the future.
Compared with a year earlier, core orders, which exclude
volatile numbers from shipping and electric power utilities, jumped 11.6 per
cent in November, the Cabinet office data found.
By sector, orders from manufacturers rose 12.9 per cent
month-on-month, offsetting a 0.8 per cent drop in those from non-manufacturers,
the data showed.
The government raised its assessment on machinery orders for
the first time in six months, saying they showed signs of picking up.
Previously, it said a pick-up in orders was showing signs of stalling.
After contracting in the third quarter of last year, Japan's
economy is expected to return to growth in the October-December quarter.
The economy is forecast to show growth of an annualised 6.5
per cent in that quarter, thanks largely to a projected pick-up in private
consumption, which makes up more than half the economy, after an easing of
coronavirus curbs.
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