Machinery orders in Japan for November beat forecasts on strong factory investment Reuters
Author: Kantaro Komiya
TOKYO (Reuters) – Basic machinery orders in Japan rose 3.4% in November from the previous month, beating analysts’ forecasts, government data showed on Monday, signaling a recovery in capital spending ahead of the central bank’s interest rate review later this week.
The reading was stronger than the 0.4% drop estimated in a Reuters poll and marked the second straight month of gains. Orders from manufacturers rose by 6.0%, while those from “core” non-manufacturers, excluding the ships and power sectors, rose by 1.2%.
“Capital investment demand in response to labor shortages and digitization remains strong,” said Masato Koike, senior economist at Sompo Institute Plus.
Business sentiment among manufacturers has improved over the past month, although their outlook has been clouded by uncertainties including Trump’s impending US presidency, a Reuters Tankan survey showed last week.
Moreover, any direct impact of a central bank rate hike on capital investment appears “minor at this point,” Koike said.
The Bank of Japan is likely to raise interest rates at its January 23-24 policy meeting, barring any market shocks after Donald Trump takes office, sources told Reuters.
On a year-over-year basis, orders for key machinery – a highly volatile data series seen as a leading indicator of capital spending over the next six to nine months – rose 10.3%, better than forecasts for a 5.6% increase, data showed on Monday .
The Cabinet Office raised its estimate of machinery orders, saying it was seeing signs of improvement.
