Japan’s core private-sector machinery orders rose a seasonally adjusted 3.8 percent in April from the previous month for the second straight monthly gain, the government said Wednesday. The figures suggest a rise in corporate investment against a background of economic recovery.
The value of orders, widely regarded as a leading indicator of future capital spending, totaled ¥902.5 billion, hitting the highest level since July 2008. The orders exclude those for ships and from utilities because of their volatility.
Following the unexpected increase in machinery orders, the government upgraded its basic assessment, saying the orders have been “picking up,” the first upward revision in four months.
The data came after the government upgraded its gross domestic product data for the first quarter of 2015 to an annualized real 3.9 percent from an initially estimated 2.4 percent, reflecting strong corporate spending.
The Cabinet Office estimated a 7.4 percent drop in core orders in the three months through June from the previous quarter due to companies’ cautious outlook for their business plans.
“Though it was widely believed that machinery orders were to weaken because of a slump in overseas economies, such perception was reversed,” said Hiroshi Watanabe, senior economist at SMBC Nikko Securities Inc.
“Capital spending has clearly bottomed out” on the back of solid domestic demand, Watanabe said.
But he also said April’s rise was attributable to unusually large orders from such sectors as the electronic and automobile industries, and it remains to be seen whether companies are preparing to repatriate to Japan their overseas production.
The figures are closely watched as Prime Minister Shinzo Abe views business investment — which accounts for around 15 percent of Japan’s gross domestic product — as a pillar of economic growth necessary to beat nearly two decades of deflation.
Orders from the manufacturing sector grew 10.5 percent to ¥402.0 billion, while those from the nonmanufacturing sector fell 0.6 percent to ¥494.9 billion.
By industry, orders from the electrical machinery sector and the automobile and related equipment industry were contributing to the increase, while those from the electric power and communication sectors fell in the wake of large orders the previous month, a government official said.
Total orders, including those from the domestic public sector and abroad, decreased 1.1 percent to ¥2,455.9 billion.
Overseas demand for Japanese machinery, an indicator of future exports, dropped 7.0 percent to ¥858.3 billion.