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Machinery orders up for first time in two months

Kyodo

Core private-sector machinery orders rose a seasonally adjusted 7.5 percent in February from the previous month as higher stocks and the yen’s slide made more companies eager to beef up investment, the government said Thursday.

The orders, which exclude those for ships as well as those from utilities because of their volatility, climbed for the first time in two months to ¥703.8 billion, rising slightly faster than market expectations.

The Cabinet Office left unchanged its basic assessment of core machinery orders, regarded as a leading indicator of capital spending, for three months in a row, saying they are “showing signs of moderately picking up.”

In the three months from January, the orders are projected to grow 0.8 percent from the previous quarter, but for that to happen, they need to rise 20.7 percent in March, a Cabinet Office official said, adding it is “difficult to achieve.”

Rather, orders during the first three months of 2013 may fall for the first time in two quarters, as they cannot exceed those from October through December unless they jump more than 18.1 percent in March, the official said.

Analysts, however, took an optimistic view of the outlook for business investment.

The core machinery orders, which in February gained at the fastest pace since June 2011, are expected to continue rising for the next few months as the government of Prime Minister Shinzo Abe, formed Dec. 26, plans to carry out large-scale public works to boost domestic demand and beat chronic deflation, they said.

“Corporate and consumer sentiment has been significantly improving, with ‘Abenomics’ helping to lower the yen and push up stock prices,” said Takeshi Minami, chief economist at Norinchukin Research Institute.