Japan machinery orders rise 3.9%

TOKYO - JAPAN'S machinery orders rose the most in five months in January, well-above forecasts, signalling that capital spending will keep fuelling growth.

Core private-sector machinery orders rose 3.9 per cent in January from December, beating economists' median forecast for a 0.5 per cent rise.

The rise was the biggest since a 6.7 per cent jump in August and followed a 0.7 per cent fall in December. The machinery report indicates corporate spending plans within six months and may offset concern that growth will slow after industrial output fell in January.

'The figures were surprisingly strong. The data showed machinery orders are clearly on a rising trend, recovering from a dip in the autumn,' said Mr Takahide Kiuchi, a senior economist at Nomura Securities. 'One reason behind the strength in capital spending is that exports are holding up fairly well.'

Compared with a year earlier, core orders, which exclude those for ships and machinery at electric power firms, rose 2.6 per cent, against a 0.8 per cent decline forecast in a Reuters poll.

A Reuters poll of 17 economists showed on Monday that Japan's economy probably grew more than initially estimated in the final quarter of last year. Forecasts for October-December growth centred on 1.3 per cent, up from an initial reading of 1.2 per cent.

REUTERS, BLOOMBERG NEWS