By Kaori Kaneko
TOKYO, Feb 7 (Reuters) - Japan's core machinery orders
surged unexpectedly in December, up for a third straight month
and firms expect more improvement in the first quarter, taking
heart from recent yen weakness on the back of Japan's aggressive
monetary easing stance.
Core machinery orders, a highly volatile data series seen as
a leading indicator of capital spending in the coming six to
nine months, gained 2.8 percent, against a median forecast for a
0.7 percent decline. It followed a 3.9 percent rise in November.
Companies surveyed by the Cabinet Office have forecast that
core orders, which exclude those for ships and machinery at
power utilities, will rise 0.8 percent in January-March from the
The orders rose 2.0 percent in October-December, the first
increase in three quarters.
The positive data will support Prime Minister Shinzo Abe who
has pledged bold economic and fiscal policy to revive the
economy and beat deflation.
'Corporate capital spending is likely to have bottomed out
and head towards a recovery from January-March,' said Tatsushi
Shikano, a senior economist at Mitsubishi UFJ Morgan Stanley
'Companies have been cautious about capital spending due to
a strong yen but the yen's recent weakening and rising share
prices are expected to boost corporate profits and thus
encourage capital spending.'
Compared with a year earlier, core orders, which exclude
those for ships and electric power utilities, declined 3.4
percent in December, versus the median estimate for a 2.9
percent annual fall, Cabinet Office data showed.
The Cabinet Office raised its assessment of machinery
orders, saying there was a moderate pick-up, compared with its
previous view that orders were weakening as a trend.
Analyst expect the economy will grow moderately this year as
exports will pick up helped by global economic rebound and Abe's
ambitious economic policy.
In January, the government approved a 10.3 trillion yen
($110 billion) economic stimulus mainly for public works, the
biggest spending boost since the financial crisis.
Under relentless pressure from Abe for more aggressive
efforts to beat deflation, the Bank of Japan last month doubled
its inflation target to 2 percent and made an open-ended
commitment to buy assets from next year.
($1 = 93.5450 Japanese yen)
(Additional reporting by Tetsushi Kajimoto; Editing by Edwina
Keywords: JAPAN ECONOMY/MACHINERY
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