Japan machinery orders rise, COVID emergency clouds outlook

Japan machinery orders rise, COVID emergency clouds outlook

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Reuters.
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PHOTO:
Fanuc
Corp’s
machinery
models
are
seen
at
Narita
International
airport
terminal
1

By
Tetsushi
Kajimoto

TOKYO
(Reuters)

Japan’s
core
machinery
orders
unexpectedly
rose
for
a
second
straight
month
in
November,
data
showed
on
Thursday,
although
a
renewed
coronavirus
emergency
in
Tokyo
and
10
other
areas
may
cool
business
appetite
for
capital
spending.

The
surprise
gain
in
core
orders,
a
key
indicator
of
capital
expenditure,
could
be
a
temporary
relief
to
policymakers
hoping
for
corporate
investment
to
spur
a
private
demand-led
recovery
in
the
world’s
third-largest
economy.

The
Cabinet
Office
data
showed
core
orders,
a
highly
volatile
data
series
regarded
as
an
indicator
of
capital
spending
in
the
coming
six
to
nine
months,
grew
1.5%
in
November
from
October,
led
by
increased
demand
for
chip-making
equipment
and
computers,
possibly
backed
by
people
working
from
home.

It
was
a
second
straight
month
of
gains
and
compared
with
economists’
median
estimate
of
a
6.2%
drop,
following
a
17.1%
jump
in
the
previous
month.

However,
Japanese
firms
could
grow
cautious
about
boosting
capital
expenditure
due
to
dwindling
corporate
profits,
while
a
state
of
emergency
implemented
in
Tokyo
and
10
other
prefectures
through
Feb.
7
could
exacerbate
conerns.

“Core
orders
likely
picked
up
in
the
fourth
quarter
due
to
pent-up
demand
for
capital
spending
thanks
to
government
stimulus
and
overseas
economic
recovery,”
said
Takeshi
Minami,
chief
economist
at
Norinchukin
Research
Institute.

“That
will
be
temporary.
The
coronavirus
has
been
spreading
in
Japan
and
elsewhere,
forcing
lockdowns
in
major
economies,
which
will
affect
Japanese
exports
and
service-sector
activity.”

By
sector,
orders
from
manufacturers
fell
2.4%
month-on-month,
while
those
from
non-manufacturers
grew
5.6%
from
the
previous
month,
the
Cabinet
Office
data
showed.

The
government
raised
its
assessment
on
machinery
orders,
saying
they
showed
a
pick-up
move.
Previously
it
said
orders
had
stopped
falling.

Japan’s
economy
rebounded
sharply
in
the
third
quarter
from
its
deepest
postwar
slump,
thanks
to
pick-ups
in
exports
and
private
consumption,
which
makes
up
more
than
half
the
economy.

But
some
analysts
flagged
the
risk
of
a
double-dip
recession
ahead
given
the
current
third
wave
of
coronavirus
infections.


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