Japanese core machinery orders jumped 13.4% in January from the previous month, the government said Thursday, indicating that companies may be willing to boost their capital spending even after a sales tax increase in April.
The large increase on month follows a record fall in orders in December, but still came out close to twice the expected increase of 7.5% as surveyed by The Wall Street Journal and the Nikkei.
Unadjusted core orders also leapt 23.6% from the year-earlier month in another indication of the strength of demand for new equipment, suggesting that firms may be more confident about the state of the economy after the rise in the sales tax than had been expected.
Machinery orders are watched closely as an indicator of corporate capital investment six months ahead. 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.
Japan’s corporate investment has been on a recovery trend since a year ago, but the pace of recovery has been subdued, forestalling the kind of self-sustaining economic growth envisaged by Prime Minister Shinzo Abe under his “Abenomics” policy platform.
