Japan's Machinery Orders Beat Expectations

Jan. 15, 2007
Machinery orders from manufacturers gained 9.7%.

Japan reported on Jan. 15 a stronger-than-expected rise in machinery orders, a key gauge of corporate capital spending, fueling speculation about a possible interest rate rise this week. Private sector core machinery orders gained 3.8% in November from the previous month, the government said, exceeding market forecasts for an increase of about 3.4% after a 2.8% gain in October.

Spending by companies on plants and equipment is playing a key role in Japan's economic recovery and the figures are closely watched by investors although they tend to fluctuate sharply from month-to-month. Total machinery orders received by 280 manufacturers operating in Japan increased by 14.2% in November from the previous month and were up 14.9% year-on-year.

Machinery orders from manufacturers gained 9.7% month-on-month while those placed by non-manufacturers were up 5.7%.

Foreign orders jumped 19.7% while public sector orders were 9.8% higher. "Foreign orders for Japanese machinery surged to a new record in November, but domestic orders continue to struggle, despite the second consecutive monthly gain," noted Macquarie Securities economist Richard Jerram.

Copyright Agence France-Presse, 2007

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