- Hidenobu Tokuda, senior economist at Mizuho Research Institute
Japan's core machinery orders increased less than expected in November amid falling orders in the manufacturing sector, as companies remain cautious about capital expenditure due to concerns over domestic demand as well as renewed worries about global growth. Orders for new machinery were up 1.3% on month in November following a 6.4% decline in the preceding month, according to Japan's Cabinet Office. Analysts, however, had expected a 4.8% advance. Orders from manufacturers plunged 7% in November, compared with a 5.5% slide in the previous month, Cabinet Office reported. Compared with a year earlier, core orders dived 14.6%. Machinery orders are predicted to have declined 0.3% in the fourth quarter of 2014.
Japan's policy makers believe that consumer spending, corporate profits, capital expenditure and exports will help support economic growth this year. Nevertheless, signs of a faltering global economy, persistently falling oil prices and a unexpected decline in copper prices underscore the challenges to this scenario. Economists predict that GDP growth in the final quarter of 2014 have turned positive, after slowing down in the two previous three-month periods immediately after the tax hike took place in April 2014. Japan's Prime Minister Shinzo Abe approved a $29 billion stimulus package last month in an attempt to stoke consumer spending and business activity.
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