Machinery orders rebounded in August on demand for electrical products, signaling that companies are willing to invest even as global economic growth slows and the yen stays near post-World War II highs.
Bookings rose 11 percent in August from July, the fastest rise in a year, the Cabinet Office said Wednesday. The indicator of capital spending in three to six months was projected to rise 3.9 percent, according to the median forecast of 31 economists. Orders fell 8.2 percent in July from June.
Wednesday’s report contrasts with data last month that undershot economist forecasts, including exports, industrial output and retail sales.
The surging yen that Nissan Motor Co. chief executive officer Carlos Ghosn said last week may cause a “hollowing out” of Japan’s industrial base also threatens to derail a rebound in the economy.
“This is relief as we thought investment may have begun plunging with uncertainties about Europe and the U.S. growing,” said Masamichi Adachi, senior economist at JPMorgan Chase & Co. in Tokyo and a former Bank of Japan official. Still, “today’s gain doesn’t guarantee sustainable capital spending ahead,” he said.
Helping push up overall orders were a 29.5 percent increase in demand for electrical machinery in August from July and a 74.6 percent jump in orders for information technology-related machinery, according to the Cabinet Office.
The yen, which has risen 5.7 percent so far this year against the dollar, touched a postwar high of 75.95 on Aug. 19.
Officials of the Keidanren business lobby told Finance Minister Jun Azumi in a meeting Wednesday that the strong yen is a problem without specifically discussing steps to stem its gains, said Mitsuo Mitani, a parliamentary secretary at the ministry. Mitani spoke to reporters after attending a meeting between Azumi and Keidanren officials including Chairman Hiromasa Yonekura.
Large companies plan to increase capital spending 3 percent in the year ending next March, less than economist forecasts for a 4.3 percent advance, the Bank of Japan’s “tankan” report showed last week.
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