- Mitsumaru Kumagai, chief economist at Daiwa Institute of Research
Japan's core machinery orders unexpectedly jumped in October by the most since March, posting a second consecutive month of gains. According to Cabinet Office, core orders, a leading indicator of capital spending in the coming six to nine months, soared 10.7% in the reported month, considerably more than a 1.5% increase expected by economists. That followed a 7.5% surge in September. Measured on an annual basis, core machinery orders, which exclude those of ships and electricity, soared 10.3% in October, overshooting expectations for a modest 1.4% gain. The data should offer some relief to Prime Minister Shinzo Abe as his Abenomics, which includes monetary and fiscal stimulus and reforms, struggles to gain traction. However, Cabinet Office suggested that October's big gains may not be sustained as the number of industries that saw orders increasing was not broadening out.
The data came on the heels of data out earlier in the week, which showed that the world's third biggest economy escaped recession in the third quarter. The initial estimate of a contraction was revised to an expansion due to upward revision of capital spending and inventory building. Japan's economy grew 0.3% in the reported period, compared with –0.2% estimated initially.
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