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Japan Feb machinery orders rise unexpectedly in positive sign for capex

Reuters  |  TOKYO 

By Stanley White

TOKYO (Reuters) - Japan's core rose unexpectedly in February for a second consecutive month thanks to increased orders from manufacturers, a positive sign of corporate investment supporting economic growth.

The 2.1 percent increase in core orders, a highly volatile data series regarded as a good indicator of capital spending in the next six to nine months, handily beat the gloomy median estimate for a 2.5 percent decline forecast in a poll of economists.

The Bank of Japan's tankan sentiment survey last week showed that planned to boost capital expenditure in the new fiscal year started on April 1, also suggesting business investment is likely to remain healthy.

However, worries about U.S. trade protectionism and potential gains in the yen versus the dollar pose risks to the outlook for Japan's capital expenditure.

Orders from manufacturers rose 8.0 percent in February, following a 9.9 percent increase in the previous month.

Non-manufacturers' orders were unchanged in February, after a 4.4 percent increase in the previous month.

Core orders, which exclude those for ships and from electric power utilities, rose 2.4 percent from a year ago versus the median estimate for orders to remain unchanged.

The outlook is heavily clouded by the brewing trade war between the and The two economic superpowers have threatened each other with heavy tariffs amid growing U.S. disapproval of China's trade practices and its treatment of foreign intellectual property.

Japanese exporters would be unlikely to increase investment if and the were to carry out their threats, with serious likely consequences for global trade and growth.

(Reporting by Stanley White; Editing by Eric Meijer)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, April 11 2018. 06:38 IST
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