Japan machinery orders rise in sign of recovery

Japan’s machinery orders, a closely watched indicator of future business investment, rose for a second straight month in April, signaling that capital spending is gathering pace with an economic recovery.

The Cabinet Office said Wednesday Japan’s core machinery orders in April expanded 4 percent from the previous month to 761.9 billion yen ($8.3 billion). The figure excludes volatile numbers from shipbuilders and electric power companies.

The April result was far better than a 1.7 percent increase projected by economists.

“Japan’s machinery orders are steadily recovering after hitting the bottom. Companies are again increasing their capital spending on the back of a global economic recovery,” said Hiroshi Watanabe, an economist at Daiwa Institute of Research.

The government upgraded its assessment of machinery orders Wednesday by saying the orders are showing “signs of picking up.”

Japan expects core machinery orders in the April-June quarter to grow 1.6 percent from the previous quarter. The orders have been rising on a quarterly basis since the July-September period last year when they slipped 0.7 percent.

A recovery in machinery orders is vital to Japan’s economy, the world’s second-largest. Corporate investment alone accounts for around 13 percent of Japan’s gross domestic product.

In April, orders from manufacturers fell 5.5 percent — the first decline in five months due to a slump in the steel and technology sectors. But orders from non-manufacturers rose 5.3 percent. Overseas orders were down 3.7 percent in April.

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Category: Japan