Japan January Machinery Orders Jump 19.6%

Japan January Machinery Orders Jump 19.6%

March 10, 2008 0 Comments

(March 10, 2008) – Japanese January Machinery Orders, a key indicator of capital spending, posted their biggest gain in seven years in January.

Machinery orders jumped 19.6% in January from the previous mont, much higher than the 3.1% rise projected by economists and the first increase in three months, but analysts cautioned that January’s rise was due to several one-time large deals.

“The result is too strong and shouldn’t be taken too optimistically,” said Shiko Research Institute economist Norio Miyagawa. “Orders growth may continue, but its speed will likely decrease ahead.

The jump in machinery orders was the sharpest since August 2000, when they rose 20.8%. Demand from overseas also increased for the first time in three months, jumping 43.1% from a month earlier. This was mainly due to a single large order for boilers and turbines, the survey showed.

Meanwhile, core orders slipped 3.2% on month, following a 2.8% decline in November. Core orders exclude those from electric power companies and those for ships, which are often a source of volatility in the overall data due to their large sizes. Unadjusted core orders in January climbed 11.4% from a year earlier.

Machinery orders are widely regarded as a leading indicator of corporate capital investment, which accounts for about 15% of Japan’s gross domestic product.

JR

John Rutledge

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