Japan’s Core Machinery Orders Rise 10.7% in October

Japan’s core private sector machinery orders expanded a seasonally adjusted 10.7 percent in October from the previous month for the second straight monthly increase, the government said Wednesday, indicating a recovery in capital investment.

The value of orders, widely regarded as a leading indicator of future capital spending, totaled 903.8 billion yen ($7.35 billion), the Cabinet Office said. The orders exclude those for ships and from utilities because of their volatility.

The government upgraded its basic assessment of core machinery orders for the first time in six months, saying they are showing “signs of picking up.” Last month, it said they were “at a standstill.”

The increase followed a 7.5 percent gain in September.

The figures are closely watched as Prime Minister Shinzo Abe’s government sees business investment — which accounts for around 15 percent of Japan’s gross domestic product — as a pillar of economic growth led by the private sector.

“The orders have started bottoming out,” said Hiroshi Watanabe, senior economist at SMBC Nikko Securities Inc. “Though firms were seen to put off investment in June to August amid concerns about Chinese and emerging economies, such moves have run their course.”

The orders are expected to decrease in November in reaction to the sharp gain in October, but a recovering trend is likely to remain in place, Watanabe added.

Orders from the manufacturing sector surged 14.5 percent for the first rise in five months to 376.5 billion yen in October, and those from the nonmanufacturing sector expanded 10.7 percent for the second straight monthly gain to 534.1 billion yen.

via Mainichi

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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