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Japan March machinery orders Jump most since ’96, tax hike pain is temporary

| Economy & Markets News, News | 05/18/2014

Japan machinery orders soar in March 2014

Japan machinery orders soar in March
Date: May 18, 2014
Source: CNBC

Japan’s core machinery orders soared 19.1 percent on month in March, a sign that corporate Japan is turning more positive on business investment, data on Monday showed.

The rise in machinery orders, viewed as an indicator of capital spending in the months ahead, compared with a 6 percent rise forecast by economists polled by Reuters.

“This could be a sign that the stimulus-led demand so far is now turning into private demand growth for Japan and this is a very good sign,” said Takuji Okubo, principal & chief economist at Japan Macro Advisors.

“Thursday’s GDP (gross domestic product) data showed signs that both exports and capital expenditure are starting to grow, so today’s numbers are another confirmation that Japan may be on its way to sustainable growth,” he added.

Data last week showed Japan’s economy grew at an annualized pace of 5.9 percent in the first quarter, posting its fastest growth in almost three years as a rise in consumer spending ahead of an April sales tax hike boosted activity.

Compared with a year earlier, core machinery orders rose 16.1 percent, above analysts’ estimates for a 4.2 percent annual increase.

Companies surveyed by Japan’s Cabinet Office forecast that core orders will rise 0.4 percent in April-June from the previous quarter, which would mark the fifth straight quarter of gains, Reuters reported. In January-March, core orders rose 4.2 percent, the data showed.

The Bank of Japan meets later this week and is not expected to take any policy action. Analysts say the central bank may maintain its upbeat view of the economy.

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One Related article of “Japan March machinery orders Jump most since ’96, tax hike pain is temporary”

  1. Japan business investment likely to stay strong
    Date: May 19, 2014
    Source: Market Watch – by Takashi Mochizuki

    TOKYO–A record surge in Japan’s machinery orders in March to a six-year high suggests Japanese business investment may remain solid even after a sales tax increase seen as a major test for the pro-growth policies of Prime Minister Shinzo Abe.

    While the higher-than-expected expansion in orders came largely from one-off demand from the manufacturing sector, economists say the outcome bodes well for the economy after the April tax increase and may also limit an expected downward revision of gross domestic product data.

    Core machinery orders shot up 19.1% in March from a month ago, the sharpest jump on record, to Yen936.7 billion ($9.23 billion), the Cabinet Office said Monday. The order volume was the highest since June 2008, before the outbreak of the global financial crisis. The core data excludes shipping and power company orders due to their large size and volatility.

    Economists surveyed by The Wall Street Journal had expected the orders to increase by 6.2%.

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