Japan’s core private-sector machinery orders jumped a seasonally adjusted 15 percent in January from the previous month for the second straight monthly gain, led by large orders from the steel industry, the government said Monday.
The orders, widely regarded as a leading indicator of future capital spending, totaled ¥934.7 billion ($8.2 billion). The orders exclude those for ships and from utilities because of their volatility.
The size of the increase, which followed a revised 1 percent rise in December, was the largest since comparable data became available in April 2005.
Despite the sharp gain, the government left unchanged its basic assessment of core machinery orders, saying they are showing “signs of picking up,” as the increase was attributable mainly to large orders from the steel sector, a Cabinet Office official said.
Based on seasonally adjusted revised figures, the office now projects orders in the January-March period will climb 6.4 percent from the previous quarter.
The figures are closely watched as Prime Minister Shinzo Abe’s government sees business investment — which accounts for around 15 percent of Japan’s gross domestic product — as a pillar of economic growth.
In January, orders from the manufacturing sector surged 41.2 percent to ¥462.5 billion for the first increase in three months, reflecting orders for such products as turbines and chemical machinery from the steel sector.
In the nonmanufacturing industry, orders rose 1 percent to ¥481.8 billion for the second consecutive monthly increase, lifted partly by a gain in orders from the financial and insurance industry.
Meanwhile, overseas demand for Japanese machinery, an indicator of future exports, slumped 29.4 percent to ¥683.4 billion for the third consecutive monthly fall.
“Weakness in external demand is a source of concern,” said Yuichiro Nagai, an economist at Barclays Securities Japan Ltd., citing a cautious outlook for machine tool and industrial machinery orders for the Asian region.
Though machinery orders are expected to continue rising moderately, turbulence in financial markets from the beginning of this year that has led to a firming yen may have hurt corporate sentiment, Nagai said.
Total orders, including those from the domestic public sector and abroad, shed 8.8 percent to ¥2.06 trillion.