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Repeats Story Initially Transmitted at 01:01 GMT Dec 13/20:01 EST Dec 12
By Max Sato
TOKYO (MNI) - Japanese machinery orders on average have been flat with a
solid undertone, led by the manufacturing sector, indicating a modest rise in
business investment in equipment, a Japanese government official told MNI
The stronger-than-expected data raise the possibility that orders may not
fall in the fourth quarter, as the government had previously predicted.
Additional data on companies' capex plans will be released Friday in the Bank of
Japan's quarterly Tankan survey for December.
Core private-sector machinery orders, which exclude volatile orders for
power generation equipment and ships, rebounded 5.0% on month in October, after
falling 8.1% in September. The October rise was stronger than the MNI survey
median forecast for a 3.0% gain.
Core orders from the manufacturing sector rose 7.4% on month to a level
last seen in January 2016, while those from the non-manufacturing sector edged
"In recent months, orders from the manufacturing sector have been strong
without any special factors such as one-off large orders. The levels of orders
from manufacturers of general machinery, automobiles and electric machines have
been high," an official at the Cabinet Office told MNI, adding it reflects the
sustained, modest economic recovery.
"However, orders from the non-manufacturing sector have been lackluster.
The upward effect of past orders for rail cars has faded and orders from the
construction industry are showing a pullback as many orders had been placed
before higher emission control took effect in September," the official said.
--GOVERNMENT MAINTAINS ASSESSMENT
Based on the October data, the Cabinet Office maintained its assessment,
saying "Machinery orders are showing signs of a pickup."
The three-month moving average of core orders was essentially flat in
October, down 0.1%, from the July-September period, when it rose 0.8%, which was
a third straight rise.
"But core orders rose 5.0% on the month in October, so we are maintaining
our assessment. The trend has not changed," the official said.
Last month the Cabinet Office projected that core orders would fall 3.5% on
quarter in October-December, which would be the first q/q drop in two quarters
after +4.7% in July-September.
Core orders could meet the forecast if they fell 3.8% on month in each of
November and December. If core orders were unchanged in each of those months,
they would rise 0.3% in Q4.
Data released last week showed Q3 real gross domestic product was revised
up sharply to +0.6% on quarter, or an annualized +2.5%, from the preliminary
estimate of +0.3% on quarter, or an annualized 1.4%. It was based on the annual
benchmark revision of GDP.
The main theme in the July-September quarter remained unchanged from the
preliminary estimate -- a rebound in net exports offset a slump in consumer
spending caused by bad weather.
Business investment was revised up to +1.1% on quarter, or an annualized
+4.3%, from the initial reading of +0.2% on quarter, or an annualized +1.0%. It
was the fourth consecutive quarter-on-quarter rise. Its contribution to overall
growth was revised up to +0.2 percentage point from the preliminary estimate of
+0.0 percentage point. It followed a contribution of +0.2 percentage point in
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