MNI BRIEF: Japan Nov Machine Orders Increase Capex Concern

Japan's core machinery orders, which exclude volatile items for power generation equipment and ships, fell 4.9% m/m in November for the first drop in three months, increasing concerns over the capital investment outlook, data released by the Cabinet Office showed on Wednesday.

Machinery orders are a leading capex indicator, but the data fluctuates sharply month-to-month.

The gap between weak implementation of capex and strong capex plans continues to concern BOJ officials and November's machinery figures will add pressure to their outlook for weaker capex and wage hikes. They will carefully examine whether the BOJ maintains its view that capex will not derail from a recovery trend at the Jan 22-23 meeting.

Orders from the manufacturing sector fell 7.8% m/m in November, for the first drop in two months following 0.7% in October, while orders from the non-manufacturing sector excluding those for power generation and ships fell 0.4% for the first drop in three months following 1.2%.