Japan: Growth accelerates to six-month high in December
February 12, 2015
Core machinery orders (a leading indicator of capital spending over a three- to six-month period) expanded in December at the fastest pace in six months, thereby suggesting that investment will support the recovery of Japan’s recession-hit economy. Headline machinery orders (private sector, excluding volatile orders) rose 8.3% in December over the previous month in seasonally-adjusted terms, which followed the 1.3% increase recorded in November. The print overshot market analysts’ forecasts for an increase of 2.4%.
Overall manufacturing orders expanded strongly, recording the fastest growth since 2006, while non-manufacturing books accelerated in December. Export orders, however, contracted again in December.
Compared to the same month of the previous year, core machinery orders rose 11.4% in December, which largely contrasted the 14.6% decrease tallied in the previous month. December’s print marked the fastest pace of expansion since April 2014. In the full year 2014, core machinery orders expanded 4.0%, which was below the 5.8% increase tallied in 2013.
As a result of the improvement observed in December, the Cabinet Office revised upward its assessment of machinery orders, stating that, “they are in a gradual recovery.” Businesses surveyed by the Cabinet Office predict that there will be a 1.5% increase in the first quarter, following the 0.4% increase tallied in the fourth quarter.