• Kyodo News

  • SHARE

Core private-sector machinery orders rose a stronger-than-expected 4.2 percent in January from the previous month on a recovery in manufacturing, adding to signs that companies are regaining their appetite for capital spending, government data showed Wednesday.

The seasonally adjusted figure expanded for the second straight month, to ¥766.1 billion, the Cabinet Office said, while maintaining its basic assessment that machinery orders are on a “trend of picking up, although some weak developments can be seen in nonmanufacturing industries.”

The increase was well above the average forecast of a 2.9 percent rise by economists in a Kyodo News survey. The core orders exclude those for ships as well as from utility providers because of their volatility.

Orders from manufacturers rose 7.2 percent to ¥326.3 billion for the first gain in two months, bolstered by orders for such products as aircraft and equipment for the chemical sector. Those from nonmanufacturers slid 2.7 percent to ¥417.8 billion, the first decline in two months.

Overseas demand, an indicator for future exports, jumped a record 71.4 percent to ¥1.24 trillion on irregularly large orders in connection with the chemical and telecommunications industries, the office said. The rate of increase was the fastest among comparable figures, which became available in 1987.

Overall machinery orders received by 280 select machinery makers in Japan, which also include those placed by the public sector, rose 19.4 percent to ¥2.49 trillion, recovering to the level seen before the global financial crisis unfolded in 2008, it said.

The robustness in machinery orders, which comes along with recovery in exports and production, adds to optimism that companies will finally accelerate their business spending instead of just hoarding profits.

“Business confidence is about to improve on recovering corporate earnings and industrial output, and core machinery orders will continue to increase moderately,” Ryota Takemoto, an economist at Nomura Securities Co., said in his report.

The government echoes a similar view. However, one of its officials said the level of corporate profits still remains relatively low, and that it is hard to expect a full recovery in machinery orders as long as companies have excess capacity for production.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.

SUBSCRIBE NOW