Japan's core machinery orders rose for the second month in October

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 9, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Mumbai) - Japan's core machinery orders threw in a surprise by rising 10.7 per cent in October, registering gains for the second straight month. The gains were higher than a 7.5 per cent increase in September, which had seen the first increase in core orders in four months. The result was also higher than the estimate of a 1.5 per cent drop. Year on year, core orders increased 10.3 per cent in October, compared to a 1.4 per cent annual rise estimated by analysts.

    The upbeat data has led the government to upgrade its assessment of machinery orders stating that the orders are "showing signs of picking up."

    Machinery orders data is an important indicator of capital spending in the coming six to nine months. However, given that they are usually very volatile, it is difficult to draw a conclusion from just one month’s reading. Core machinery orders exclude orders from electric power companies as well as orders for ships in the overall data due to their large sizes.

    Japan’s initial estimate of a contraction in the July-September quarter was revised to an annualized expansion of 1.0 per cent yesterday. The upgrade was possible on account of an increase in capital expenditure. With the GDP revised upward, Japan has managed to avoid technical recession for now. Also investment in hotels and retail outlets across the country saw a significant rise as Chinese tourists made their way to Japan. These are signs that the economy is looking up.

    However, the slowdown of the Chinese economy remains a concern. Decline in sales of smartphones in China have weakened demand for Japanese capital goods recently.
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