TOKYO: Japan recorded 1.3% increase in core orders on doubts over pace of economic recovery. Lacklustre business investment could also be a sign that consumer demand is weak, which could make it difficult for the Bank of Japan to achieve its 2 percent inflation target.
The 1.3 percent increase in core orders, which exclude those of ships and electric power utilities, lagged a 5.0 percent rise forecast by economists in a Reuters poll. It followed a 6.4 percent decline in October.
Japan’s policymakers have said consumer spending, corporate profits, capital expenditure and exports will underpin growth this year. However, signs of a slowing global economy, plunging oil prices and a sudden slide in copper prices underscore the challenges to this scenario.
Capital expenditure has been on the recovery path since the summer last year, but now we are starting to see some signs of caution,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute.
Weak capital expenditure could cast doubt on Prime Minister Shinzo Abe’s argument that his mix of fiscal stimulus, monetary easing and structural reforms is leading to a revival of Japan’s hollowed-out manufacturing sector.
