TOKYO : Japan’s core machinery orders rose 3.4 per cent in November from the previous month to beat analysts’ forecast, government data showed on Monday, signalling a recovery in capital expenditure ahead of a central bank interest rate review later this week.
The reading was stronger than a 0.4 per cent decline estimated in a Reuters poll and marked a second consecutive month of increase. Orders from manufacturers rose 6.0 per cent, while those from “core” non-manufacturers excluding the ship and electricity sectors rose 1.2 per cent.
“Demand for capital investment in response to labour shortages and digitalisation remains strong,” said Masato Koike, senior economist at Sompo Institute Plus.
Manufacturers’ business sentiment improved over the past month, though their outlook is clouded by uncertainties including the incoming U.S. Trump presidency, the Reuters Tankan survey showed last week.
Moreover, any direct impact of a central bank rate hike on capital investment seems “minor at the moment”, Koike said.
The Bank of Japan is likely to raise interest rates at its Jan. 23-24 policy meeting, barring any market shocks after Donald Trump takes office, sources have told Reuters.
On a year-on-year basis, core machinery orders – a highly volatile data series regarded as a leading indicator of capital spending in the coming six to nine months – increased 10.3 per cent, better than a forecast for 5.6 per cent growth, Monday’s data showed.
The Cabinet Office raised its assessment of machinery orders, saying it sees signs of improvement.
