Japan’s machinery orders mark 8.2% increase on month in January: Cabinet Office

Kyodo

Core private-sector machinery orders gained 8.2 percent in January compared with the previous month as a pick-up in demand in the manufacturing and service sectors helped them recover from a sharp fall, government data showed Wednesday.

The orders, which exclude those for ships and from utilities because of their volatility, totaled ¥872.3 billion.

The 8.2 percent gain in machinery orders — widely seen as an indicator of future capital spending by companies — was the largest in two years and followed a revised 9.3 percent drop in December, a government official said.

The Cabinet Office maintained its assessment that machinery orders show signs of “picking up.”

Capital expenditure, a key component of the economy, has been picking up as global economic growth has gained traction. Japanese firms have been increasing investment to speed up production automation to cope with strong overseas demand and labor shortages at home.

Lifted by demand for semiconductor-manufacturing equipment and other machinery, orders from manufacturers increased 9.9 percent to ¥409.4 billion.

Orders from the nonmanufacturing sector rose 4.4 percent to ¥465.4 billion.

Overseas demand for Japanese machinery, an indicator of future exports, surged 11.6 percent to ¥1.10 trillion following an 8.2 percent fall in December.

Total orders, including those from the domestic public sector and abroad, were up 4.5 percent to ¥2.47 trillion.

The economy grew at an annual rate of 1.6 percent in the October-December period as domestic demand — corporate spending and private consumption — strengthened.

For the January-March quarter, machinery orders, excluding those for ships and from utilities, are expected to drop a revised 1.5 percent from the previous quarter, the Cabinet Office said.