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

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.