Japan’s core machine orders surge in November

by BLOOMBERG

TOKYOJapan’s core machine orders unexpectedly rose in November, driven by demand from the nation’s non-manufacturing sector, the latest sign of strengthening capital investment.

Japan’s core machine orders rose 5.7% from a month earlier, beating estimates of a 1.4% fall, according to figures released by the Cabinet Office yesterday. From a year earlier, orders rose 4.1%, beating estimates of a 1% decline.

Orders from the non-manufacturing sector rose 9.8% from the previous month, while orders from the manufacturing sector declined 0.2%. Within non-manufacturing, transport and postal services and the wholesale, retail and construction sectors boosted the numbers the most.

A recovery in goods exports has driven corporate profits and business investment, and the latest core machine orders suggest that non-manufacturing firms are also becoming more confident about the business outlook. Core machine orders are an indicator of future capital spending, and exclude volatile orders for ships and orders from electrical power companies.

Surprising strength in Japan’s November machine orders points to a clear increase in the fourth quarter — probably surpassing corporate projections, Yuki Masujima of Bloomberg Economics wrote. Domestic demand, particularly in the non-manufacturing sector, drove the gains. — Bloomberg