Japan's core machinery orders in July far exceeded expectations, rebounding from last month's decline, consolidating the view that capital spending will continue to rise and boost overall economic growth.
Core machinery orders rose 11.0% in July from the previous month, 5.7% higher than the Reuters survey forecast, and the fastest growth since January 2016. This highly volatile data is seen as a leading indicator of capital expenditure.
Overseas machinery orders rose 6.0% in July from the previous month, recovering from a 12.0% drop in June, suggesting that export demand will remain firm as trade frictions rise.
But the prospect is not without risk. Confidence in Japan's manufacturing sector slipped from a seven-month high in September, according to a short-sighted Reuters survey, amid fears of an escalating trade war between the United States and China.
However, analysts are still predicting that more investment will be made in order to cope with the increasing labour shortage. But if Japan falls into a trade war with the United States, enterprises may control spending.
"The demand for new equipment by Japanese companies is very strong, and they are willing to do so even if protectionism clouds the future," said Hiroshi Miyazaki, senior analyst at Mitsubishi UFJ Morgan Stanley Securities.

<>Japan's core machinery orders far exceeded expectations in July

 

PREVIOUS:The US dollar declined because of reports that US officials were seeking a new r        NEXT:U.S. stocks rose because Apple LED technology stocks stronger and trade worries