TOKYO: Japanese core machinery orders jumped 15% in January, the second straight month of increase, the government said Monday, despite lingering concern about the slowing Chinese economy. The rise in core orders–a leading indicator of business investment–was better than a 2.7% increase expected by economists surveyed by The Wall Street Journal and the Nikkei.
On an year-on-year basis, core orders increased 8.4%. Rising orders among steel makers and shipbuilders contributed to the strong January figure. Machinery orders can be volatile from month to month. The data follow a series of economic indicators showing a deterioration in consumer and business sentiment, as stock prices remain sharply lower, and the yen much stronger, for the year.
According to a survey released Friday by the Ministry of Finance, Japanese companies expect to reduce capital spending by 6.6% in the next fiscal year starting in April, after increasing it 8.8% in the current fiscal year. This poses a difficult question for Prime Minister Shinzo Abe, who has counted on business spending to lead the Japanese economy higher.
Business investment increased in the past two years, as firms built new hotels and warehouses and acquired new computer systems in response to an increase in the number of Chinese tourists and growth of Internet-related businesses.
