"The BOJ has been and will always be ready to take appropriate and decisive action when the economy deviates from our baseline scenario, or when risks to our scenario materialise"
- Deputy Governor Kiyohiko Nishimura
Machinery orders in the world's third biggest economy rose for the first time in three months, a sign that companies expect to see some improvement in the economy in the next year. According to the Cabinet Office, Japan's core machinery orders rose 2.6% in October, from September, when they had dropped 4.3%. However, core orders, which are considered to be a leading indicator of capital spending in the coming six to nine months, missed analysts' expectations of a 3.0% increase. The slight improvement in orders and production in October suggest the economy is laying the foundations for recovery after it has shrank for two consecutive quarters, falling into technical recession.
"Companies are still cautious but a weaker yen and signs of recovery in the global economy are providing some relief," said Akiyoshi Takumori, chief economist at Sumitomo Mitsui Asset Management Co. "Japan's economy is going to have a moderate recovery."
"Japan's economy can emerge from recession in the first quarter as consumer spending and exports are expected to pick up," said Yasuo Yamamoto, senior economist at Mizuho Research Institute. "But in order for growth to accelerate even further, capital expenditure needs to improve. Unfortunately, capital expenditure is likely to remain weak."
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