Japan Machinery Orders Rose 5.4% in March

Japan’s machinery orders, a closely watched indicator of future business investment, rose in March for the first time in three months, indicating companies are becoming bullish on spending in line with an economic recovery.

The Cabinet Office said Monday that Japan’s core machinery orders in March increased 5.4 percent from the previous month to 732.9 billion yen ($7.9 billion). The figure excludes volatile numbers from shipbuilders and electric power companies.

The March result was better than Kyodo News agency’s average market forecast of a 5.2 percent increase.

“Overall, companies are boosting their investments again on the back of Japan’s economic recovery. Among key sectors, the auto and machinery sectors are increasing their spending,” said Hiroshi Watanabe, an economist at Daiwa Institute of Research.

The government said it expects core machinery orders in the April-June quarter to grow 1.6 percent from the previous quarter. Japan’s machinery orders have been rising on a quarterly basis since the July-September period last year when orders slipped 0.7 percent.

A recovery in machinery orders is vital to Japan’s economy — the world’s second-largest. Corporate investment alone accounts for around 13 percent of Japan’s gross domestic product.

Orders from manufacturers rose 3.1 percent in March, while orders from non-manufacturers jumped 12.6 percent. Overseas orders climbed 3.9 percent in the month.

In the previous fiscal year to March 2010, core machinery orders dropped a record 20.6 percent to 8.43 trillion yen — the lowest level since Japan began compiling the statistics in 1987, the government said.

TOKYO (AP)