Japan machinery orders rise, capex recovery seen
By Tetsushi Kajimoto and Stanley White
TOKYO (Reuters) - Japan's core machinery orders rose at a faster pace than expected in January in a sign that rebuilding the country's tsunami-battered northeast coast could propel capital expenditure and support the fragile economy.
Core machinery orders, which help gauge the strength of capital spending, rose 3.4 percent in January from the previous month, beating a median market forecast for a 1.6 percent increase.
The data bolsters the argument that domestic demand can drive the world's third-biggest economy this year as the country rebuilds from last year's disaster and could stay the hand of the Bank of Japan when it starts a two-day policy meeting later on Monday.
Other recent data, including larger-than-expected gains in industrial output and an upward revision to fourth quarter gross domestic product, also raised hopes that Japan's economy will gather momentum this year.
"The data shows corporate capital spending is rising moderately thanks partly to reconstruction-related demand, although the momentum is not that strong," said Junko Nishioka, chief economist at RBS Securities in Tokyo.
"As reconstruction shifts to a higher gear, corporate capital spending is expected to pick up in April-June this year. As the yen has eased and corporate profits are expected to recover, the economy is likely to maintain a moderate recovery."
The central bank is expected to stand pat on policy at a two-day policy meeting starting on Monday, even as politicians call for another "big bang" stimulus to shore up the economy.