- Shoji Tonouchi, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities
Japan's core machinery orders rebounded in December, despite mounting uncertainty over the global economy. Machinery orders excluding ships and utility items jumped to a seasonally-adjusted 4.2% on month in December, according to the Cabinet Office, following a massive plunge of 14.4% a month earlier. Analysts predicted machinery orders to surge 4.6% in December. Companies anticipate orders to accelerate further in January-March, in an encouraging sign that capital expenditure will support economic growth. Japanese companies expect core machinery orders to surge 8.6% in the first quarter of the year, after rising 4.3% in the October-December period. Measured on an annual basis, core orders in December dropped 3.6%
Initial estimates of GDP growth showed the world's third biggest economy contracted 0.4% in the December quarter, due to a steep decline in private consumption. On an annual basis the Japanese economy shrank 1.4% during the period, compared with expectations for an annualised contraction of 1.2%. Analysts say Japan needs to ensure exports increase in order to support future economic growth. For every 1% that Japan's economy expands, between 0.5 and 0.7% comes from exports.
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