TOKYO: Japan's core machinery orders rose more than expected and marked their second straight month of gains in January, suggesting that rising exports and robust profits will gradually nudge companies into increasing spending on plant and equipment, according to Reuters.
But analysts said any increase in capital expenditure would be moderate as Japan's return to an economic recovery would be driven largely by exports, with domestic demand seen weak.
Policymakers are growing increasingly confident that Japan's economy is steadily emerging from a lull, but some fret about the negative impact that the recent rise in oil prices could have on the fragile recovery.
"Exports need to grow more strongly for capital spending to increase significantly. With the overseas economic outlook uncertain due to the recent spike in commodity costs, a full-fledged recovery in capital spending won't come any time soon," said Takeshi Minami, chief economist at Norinchukin Research Institute.
"That means Japan's economy won't achieve strong growth at least for the first half of this year. It might be tough to say with certainty that Japan's economy will escape from a lull."
Core machinery orders, a highly volatile data series regarded as a leading indicator of capital spending, rose 4.2 percent in January from the previous month, Cabinet Office data showed on Wednesday.
That was a bigger increase than a median estimate for a 2.5 percent gain and follows a 1.7 percent rise in December.
Japan's economy likely rebounded in the first quarter after a slight contraction in the final quarter of last year, leading to a moderate pickup in capital expenditure.
The growing bright signs have prompted the government to upgrade its economic assessment and scaled back market expectations of an imminent monetary easing by the Bank of Japan.
The BOJ sees no need to ease monetary policy further at this time. But some in the bank fret about the recent spike in commodity costs which, if it persists, may hurt corporate profits and household spending. The central bank is set to keep policy on hold at its next rate review on March 14-15. - Reuters
But analysts said any increase in capital expenditure would be moderate as Japan's return to an economic recovery would be driven largely by exports, with domestic demand seen weak.
Policymakers are growing increasingly confident that Japan's economy is steadily emerging from a lull, but some fret about the negative impact that the recent rise in oil prices could have on the fragile recovery.
"Exports need to grow more strongly for capital spending to increase significantly. With the overseas economic outlook uncertain due to the recent spike in commodity costs, a full-fledged recovery in capital spending won't come any time soon," said Takeshi Minami, chief economist at Norinchukin Research Institute.
"That means Japan's economy won't achieve strong growth at least for the first half of this year. It might be tough to say with certainty that Japan's economy will escape from a lull."
Core machinery orders, a highly volatile data series regarded as a leading indicator of capital spending, rose 4.2 percent in January from the previous month, Cabinet Office data showed on Wednesday.
That was a bigger increase than a median estimate for a 2.5 percent gain and follows a 1.7 percent rise in December.
Japan's economy likely rebounded in the first quarter after a slight contraction in the final quarter of last year, leading to a moderate pickup in capital expenditure.
The growing bright signs have prompted the government to upgrade its economic assessment and scaled back market expectations of an imminent monetary easing by the Bank of Japan.
The BOJ sees no need to ease monetary policy further at this time. But some in the bank fret about the recent spike in commodity costs which, if it persists, may hurt corporate profits and household spending. The central bank is set to keep policy on hold at its next rate review on March 14-15. - Reuters
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