Japan Machinery Orders Jump but Outlook in Doubt

Japan’s core machinery orders jumped more than 20 percent in December, but that failed to alleviate concerns about capital spending and the tepid economic recovery as the services sector is still slashing its spending.

The slide in wholesale prices eased as expected, but deflation is still likely to persist for at least a few years as weak domestic consumption pushes companies to cut prices to lure consumers.

“If you look at the quarterly data, non-manufacturers are not doing very well,” said Yoshiki Shinke, senior economist at Dai-Ichi Life Research Institute.

“This is a sign that domestic demand isn’t strong and this will weigh on capital expenditure somewhat. We can still expect capital spending to grow this year due to manufacturers’ investment … but without much of a contribution from the services sector, overall spending growth will be gradual.”


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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza