Japan Machinery Orders Rise

Japan’s core machinery orders grew in March for the first time in two months but they are seen slipping in the current quarter, suggesting that weak capital spending could further sap momentum from an economy struggling to rebound from a recession.  The 2.9 percent month-on-month rise in core orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, beat economists’ median estimate of a 1.8 percent gain, Cabinet Office data showed on Monday.  That followed a revised 1.4 percent drop in February.

The data comes ahead of a government report on gross domestic product which is expected to show two straight quarters of moderate growth in the world’s third-largest economy following last year’s recession.  The worry for policy makers is the weak outlook for capital spending which is seen as crucial to driving a virtuous cycle of higher income, consumer spending and robust economic growth.

Companies surveyed by the Cabinet Office forecast that core orders, which exclude those of ships and electric power utilities, will fall 7.4 percent in the current quarter.  In January-March, core orders rose 6.3 percent from the prior quarter, up for three quarters in a row and marking the biggest gain in seven quarters.