Japan’s September machinery orders jumped 10.5% according to a government report Wednesday.
While much of this was due to volatile demand from electric power companies and shipping, the result blew away consensus expectations for 3.2% growth.
Even the ‘core’ measure of machinery sales, ex-power and shipping, shows signs of bottoming out.
Thing is, any current strength might be more a reflection of overseas demand rather than anything in Japan.
Forbes (Reuters): TAKESHI MINAMI, CHIEF ECONOMIST, NORINCHUKIN RESEARCH INSTITUTE
‘Core machinery orders seem to have hit bottom but companies are still saddled with excess output capacity so it’s unclear whether orders will start to increase as a trend.
‘There’s a chance Japan’s economy will post flat or slightly negative growth in the first quarter of next year. There’s talk of the government compiling a second extra budget of around 3 trillion yen, but that won’t help much.
‘The economy can’t expect much support from capital spending. It would be quite some time before Japan’s economy achieves a self-sustained recovery.’