TOKYO- Japan’s core machinery orders unexpectedly rose for a second straight month in November, data showed on Thursday, although a renewed coronavirus emergency in Tokyo and 10 other areas may cool business appetite for capital spending.
The surprise gain in core orders, a key indicator of capital expenditure, could be a temporary relief to policymakers hoping for corporate investment to spur a private demand-led recovery in the world’s third-largest economy.
The Cabinet Office data showed core orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, grew 1.5 percent in November from October, led by increased demand for chip-making equipment and computers, possibly backed by people working from home.
It was a second straight month of gains and compared with economists’ median estimate of a 6.2 percent drop, following a 17.1 percent jump in the previous month.
However, Japanese firms could grow cautious about boosting capital expenditure due to dwindling corporate profits, while a state of emergency implemented in Tokyo and 10 other prefectures through Feb. 7 could exacerbate conerns.
“Core orders likely picked up in the fourth quarter due to pentup demand for capital spending thanks to government stimulus and overseas economic recovery,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
“That will be temporary. The coronavirus has been spreading in Japan and elsewhere, forcing lockdowns in major economies, which will affect Japanese exports and service-sector activity.”
