Japan's core private-sector machinery orders rise in November, gov't view upgraded

2022-01-17 13:21

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TOKYO, Jan. 17 (Xinhua) -- Japan's core private-sector machinery orders rose in November from a month earlier, the government said in a report on Monday.

According to the Cabinet Office, the orders, excluding those for ships and utilities because of their volatility, increased 3.4 percent from the previous month, marking the second successive month of increase.

The orders, a key advance indicator for corporate capital spending, totaled 900.3 billion yen (7.9 billion U.S. dollars) in the reporting period, the office said.

The Cabinet Office raised its assessment of the orders for the first time in six months that they were showing "signs of picking up."

The latest assessment comes on the heels of the previous view that orders were "showing signs of stalling in their recovery."

The global coronavirus pandemic and surging Omicron variant cases impacting factories' workforces could see output fall and supply chains once again disrupted, analysts said.

They added that businesses could rethink their capital investment plans, which will likely see investments downwardly revised in Japan, as daily virus cases surpassed the 20,000-mark on Sunday, just shy of its August record or 25,992 daily infections.

Orders from manufacturers, however, increased 12.9 percent, in contrast to a 15.4-percent slump in October, with the auto and related parts sector leaping 15.4 percent, while those in the electric machinery sector jumped 15.3 percent.

The chemical sector, meanwhile, surged 32.1 percent, the latest figures showed.

Orders from overseas, however, seen as an indicator of future exports, edged up a mere 0.7 percent in November, following a 17.2 percent surge booked a month earlier, the Cabinet Office said.

Machinery orders are a key advance indicator for corporate capital spending and the government uses this key data to predict the strength of business spending in a six to nine month period ahead.

A rise in capital expenditure here can boost the economy as Japanese companies are producing more machinery to meet rising demands from overseas markets.

A drop in such expenditure can have the reverse effect.

Such business investment accounts for roughly 15 percent of Japan's gross domestic product.

Types of machinery included in the monthly government survey comprise engines and turbines, heavy electrical machinery, electronic and communication equipment, industrial machinery, machine tools, railway rolling stock, road vehicles, aircraft, ships, water crafts, as well as sub types in those categories.
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