The government upgraded its view of domestic machinery orders for the third consecutive month on Monday, now that orders have risen for four consecutive months.
Core machinery orders increased a seasonally adjusted 1.9 percent in July, after having risen 2.9 in June, 0.2 percent in May and 8.4 percent in April.
It is the first time since December 1995 that this key gauge has risen for four consecutive months.
The Cabinet Office now expects corporate capital investment to show signs of bottoming out toward the end of fiscal 2002, according to Yoshihiko Senoo, a senior economist at the office’s Economic and Social Research Institute.
“Machinery orders are showing moves of bottoming out,” remarked Senoo, in announcing the upgrade.
He had said the previous month that there were signs that machinery orders were hitting bottom.
The August pronouncement suggested that the degree of decline had slowed, while the latest view indicates they have almost flattened out, he said.
“Given the moves of machinery orders, there is a possibility that corporate investment in facilities and equipment will show moves of bottoming out toward the end of the fiscal year,” Senoo added.
Private sector machinery orders are seen as a leading indicator of corporate capital spending six to nine months ahead.
Core private sector machinery orders came to 888.4 billion yen in July.
This figure excludes orders for ships and from electric power companies, which are prone to volatility due to their magnitude.
It also represents an unadjusted 5.8 percent drop from a year earlier, down for the 14th straight month.
The margin of decline, however, marks a decrease from April’s 17.9 percent, May’s 16.6 percent and June’s 7.6 percent, the office said.
Senoo cautioned that machinery orders could fall in August and September, saying, “Moves ahead need to be carefully monitored.”
The office predicted in August that core orders would slide 3.9 percent in the July-September quarter after climbing 7.1 percent in the April-June period.
In July, orders from manufacturers jumped 8.3 percent from the previous month to 342.2 billion yen, up for a second straight month, while core orders from nonmanufacturers fell 1.9 percent to 547.9 billion yen, it said.
Machinery orders have stopped falling in most manufacturing sectors, except within the category that features plastic processing, lumber and printing industries, Senoo said.
Orders among automakers soared 36.1 percent, those of chemical firms jumped 29 percent, while those of petroleum and coal products manufacturers jumped 135,7 percent, due primarily to exports.
Orders fell 9.2 percent within the food industry, while orders among textile makers fell 23.7 percent.
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