Japan's Machinery Orders Up in October

Dec. 10, 2007
Manufacturing rose by 10.2%

Japan's core machinery orders, a closely watched barometer of corporate capital spending, rose faster than expected in October with the first gain in three months, official figures showed Dec. 10. But economists warned against being overly optimistic about the figures amid concern that a key central bank survey due later this week will show companies are growing more cautious about the profit outlook.

Core private-sector machinery orders, which exclude particularly volatile demand from power companies and for ships, rose 12.7% in October from September to 1.08 trillion yen (US$9.7 billion), the Cabinet Office said.

Year-on-year, core machinery orders rose 3.3% in October after a decline of 7% in September.

Machinery orders placed by the manufacturing sector rose 10.2 %in October from September, while orders by non-manufacturers soared 13.7%.

Foreign orders grew 16% from September while public sector orders jumped 21.6%.

Despite the rebound, the Cabinet Office said it was sticking to its assessment that the overall trend in machinery orders is flat. Economists also reacted cautiously. Goldman Sachs senior economist Naoki Murakami said the jump in orders was "a reaction to the declines in the previous two months." The improvement was helped by higher orders for computers and semiconductor-making devices, he noted.

Robust investment by companies on new equipment and factories has been a key driver of the recovery, but there are signs that firms are becoming more reluctant to ramp up spending due to the chilly global economic environment.

Copyright Agence France-Presse, 2007

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