TOKYO (Reuters) – Japan’s core machinery orders rose in October for the first time in three months, a welcome sign that firms were spending and the broader economy was recovering as months-long supply constraints eased.
The world’s third-largest economy is set to post a solid rebound this quarter after a larger-than-expected contraction in July-September, although the outlook is currently blurred by uncertainties around the new Omicron coronavirus variant.
Core machinery orders, a highly volatile leading indicator of capital spending in the coming six to nine months, rose 3.8% in October from the previous month, the Cabinet Office data showed on Monday.
It compared with a 2.1% expansion forecast by economists in a Reuters poll and followed no change in September.
Companies’ capital expenditure slowed in the third quarter due to a global resurgence of COVID-19 outbreak, which particularly battered carmakers and other manufacturers dependent on parts supplies from Asian factories.
While supply bottlenecks eased, the outlook on production and spending remained sluggish. The Bank of Japan’s quarterly Tankan survey on Monday showed large manufacturers’ business mood was flat in December from October.
The central bank is expected at this week’s policy review to debate whether to extend pandemic relief programmes beyond their current March 2022 deadline, while no change to its ultra-easy monetary policy is expected.
(Reporting by Kantaro Komiya; Editing by Sam Holmes)
