Japanese Machinery Orders Fall in January

Japan’s core machinery orders fell 1.7 percent in January from the previous month, underscoring the challenges facing the government as it attempts to nudge firms into boosting spending on wages and equipment with its aggressive stimulus policies.

Nonetheless, emerging signs of a steady pick up in exports have some analysts taking a more sanguine view of the outlook for capital spending even as the economy struggles to motor on from last year’s recession.

Indeed, the decrease in machinery orders was smaller than a median market forecast for a 4.1 percent drop, and the government said the decline was largely payback for the 8.3 percent rise in December – the fastest pace in six months.

“Capital spending is recovering, although at a slower pace than initially thought,” said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance.

“There are emerging signs of recovery in exports so capital expenditure will pick up.”

Compared with a year earlier, core orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, increased 1.9 percent in January, data by the Cabinet Office showed on Wednesday.

Capital spending and wage growth hold the key to the ultimate success of Prime Minister Shinzo Abe’s policy recipe dubbed “Abenomics” aimed at generating a virtuous cycle of private-sector-led growth.

via CNBC

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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