Core private-sector machinery orders in Japan unexpectedly rose for the first time in five months in February, helped by an apparent pickup in some nonmanufacturing businesses, the government said Thursday.
Despite continued weak overseas demand, orders grew a seasonally adjusted 1.4 percent from January to ¥728.1 billion, which compares with the average market forecast of an 8.1 percent drop in a Kyodo News survey.
Among nonmanufacturers, the transport and agricultural sectors contributed significantly to the better-than-expected reading, with orders increasing for items such as railway vehicles and cultivating machinery, according to the Cabinet Office.
Core private-sector machinery orders, which exclude those for ships and from electric utilities, are regarded as a leading indicator of corporate capital spending about six months ahead.
Following the expansion, the Cabinet Office changed its assessment for the first time in three months, saying machinery orders “remain on a downtrend,” instead of using the expression “drastically decreasing.”
This is the first time since May 2007 that its assessment has been revised upward, according to the office.
But a Cabinet Office official warned against being too optimistic about the future of the economy, noting that manufacturing and overseas machinery orders remain at their lowest levels.
Yuichiro Nagai, an economist at Barclays Capital Japan Ltd., also said it would be premature to declare the economy has bottomed out with the latest recovery in core machinery orders.
“We have to keep close tabs on overseas demand and orders from manufacturers,” Nagai said. “We have to wait until next month to see whether there will be any improvement in these two key points.”
On a year-on-year basis, core private-sector machinery orders fell an unadjusted 30.1 percent in February.
Overseas demand, an indicator of future exports, decreased 22.9 percent from January and 74.3 percent from a year earlier to a record low of ¥296.5 billion.
Orders from manufacturers declined 8.1 percent from the previous month to ¥202.5 billion, also at the lowest level since April 1987, when comparable data became available.
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