Machinery orders, a leading indicator of capital spending over a three to six month period, soared to a four-year high in November after declining for two consecutive months, in defiance of a strengthening yen and a slowing global economy. In November, core machinery orders (private sector, excluding volatile orders) jumped a seasonally adjusted 14.8% over the previous month, which contrasted the 6.9% decline recorded in October. In addition, the reading overshot market expectations that had orders rising 5.1%. The expansion was the result of a marked improvement in non-manufacturing orders. Manufacturing orders also continued to expand, albeit at a softer pace. Moreover, overseas demand for machinery, which determines future exports, climbed a strong 20.3% over the previous month, after adding a paltry 1.6% in October. Compared to the same month the previous year, core machinery orders grew 12.5% in November, which was well above both the 1.5% increase recorded in the previous month and the 3.8% rise expected by market analysts. Owing to the strong monthly figure the trend improved, with annual average growth in machinery orders inching up from 7.1% in October to 7.2% in November. Despite the sharp rise in machinery orders, the Cabinet Office maintained its basic assessment that orders will remain roughly flat for the next few months. In addition, the Cabinet expects that machinery orders will contract 3.8% in the fourth quarter.
Machinery orders surge in November
January 16, 2012
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Japan Economic News
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