"Our house view is the BOJ will ease policy in January, but the chances have risen that the BOJ will move later this month. There will also be talk about a new fiscal stimulus package."
- Mizuho Research Institute
A rebound in capital expenditure in Japan was proved elusive, as machine orders fell at their fastest pace since 2014 in the eighth month of the year, undermining the BoJ optimism. Core machinery orders, a leading indicator of corporate capital investment, slumped 5.7% on a monthly basis in August, following a 3.6% decline in the prior month. The market consensus expected the reading to post a 3.2% gain in the reported period. The data followed the BoJ survey, which indicated a growth in business investment for the current fiscal year, despite continued uncertainty over the global economy and sluggish growth in household spending in Japan.
In the meantime, Japan posted its largest current account surplus for the month of August in eight years, as crude prices pushed down the value of oil imports and the weaker Yen boosted income from overseas investments, despite continuing trade deficits. The current account surplus stood at 1.65 trillion yen in the reported month, up sharply from 249.4 billion yen in August last year, while the median forecast of economists was for 1.2211 trillion yen. The weakened Yen also helped to attract foreign visitors to Japan, lifting the travel balance to a surplus of 78.2 billion yens.
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