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Japan Oct core machinery orders rise, beating expectations

Monday, December 12, 2016 - 09:00

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Japan's October core machinery orders rose for the first time in three months to beat expectations, government data showed - a tentative sign of a pickup in capital expenditure.

[TOKYO] Japan's October core machinery orders rose for the first time in three months to beat expectations, government data showed - a tentative sign of a pickup in capital expenditure.

Core orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, rose 4.1 per cent in October from the previous month, Cabinet office data showed on Monday. The results handily beat the economists' median estimate of a 1.0 per cent increase.

" Machinery orders are basically flat but picking up slightly," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"If this pick up continues, capital expenditure might increase in fiscal 2017," Mr Minami said, adding that improvement in domestic demand may help boost capital expenditure.

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October's results are welcome news for Japanese policymakers, who are counting on capital spending to foster sustainable growth in the world's third largest economy.

A Cabinet Office official said machinery orders for Oct-Dec, which manufacturers had previously predicted would decrease 5.9 per cent, may not fall as much as expected because orders improved in October. However, the official cautioned that orders may not continue to rise steadily.

The government maintained its assessment that a slowdown in the pick up of machinery orders can be seen.

Capital expenditure fell in the July-September quarter for the first time in nearly four years, in a worrying sign that uncertainty over the economic outlook is eroding companies'confidence.

Japan's economy also grew much slower than initially estimated in the third quarter as capital expenditure dried up and companies ran down inventories.

REUTERS

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