Japan's Machinery Orders Beat Expectations

March 9, 2007
Auto sector resumed expansion of production to meet global demand.

Japanese machinery orders showed a bigger than expected rise in January as automakers invested in production facilities to meet brisk global demand, official figures showed March 9. Core private sector machinery orders, a key gauge of corporate capital spending, rose 3.9% in January compared with December and were up 2.6% year-on-year, the Cabinet Office said.

Machinery orders placed by the manufacturing sector jumped 4.8% month-on-month in January, while orders placed by non-manufacturers were up 2.2%, the Cabinet Office said.

Core machinery orders are forecast to rise 2.2% in the three months to March from the previous quarter, according to machinery manufacturers' forecasts.

The figures confirmed that corporate capital investment remained firm in January as the automotive sector resumed its expansion of production capacity to meet global demand, Mitsubishi UFJ Securities economist Osamu Katano said. Orders from the automotive industry were up 7.4% in January from December, having declined in the preceding three months.

Spending by Japanese companies on new plant and machinery has been a key pillar in the nation's economic recovery after a decade in the deflation doldrums, helping to offset subdued consumer spending.

Copyright Agence France-Presse, 2007

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