March 11, 2013 / 12:31 AM / 5 years ago

UPDATE 1-Japan Jan core machinery orders plunge, but recovery eyed

* Jan core machinery orders -13.1 pct m/m (Reuters poll -2.0
    * Jan core machinery orders -9.7 pct y/y (Reuters poll -0.8

    By Kaori Kaneko
    TOKYO, March 11 (Reuters) - Japan's core machinery orders
plunged in January from the previous month, falling for the
first time in four months and suggesting companies are cautious
on capital spending due to uncertainty over the economy's
    The 13.1 percent drop from December reported by the Cabinet
Office on Monday was much deeper than a median market forecast
for a 2.0 percent monthly decline and followed a 2.8 percent
increase in December.
    The data tend to be volatile, and so did little to change
analysts' dominant view that the world's third-largest economy
is emerging from a slump with the help of Prime Minister Shinzo
Abe's policy mix of monetary and fiscal stimulus.
    "The fall was bigger than expected but I still would say
this is temporally fall," said Takeshi Minami, chief economist
at Norinchukin Research Institute. 
    "The yen's weakness helps expectations for exports to pick
up and business sentiment has been also improving," he said,
adding he expected capital spending to gradually pick up in the
fiscal year starting in April.
    The yen hovered around 3-1/2 year lows against the
dollar at around 96 after strong U.S. jobs data on Friday buoyed
the U.S. currency. 

    Compared with a year earlier, core orders, which exclude
those of ships and power utilities and are regarded as an
indicator of capital spending in the coming six to nine months,
fell 9.7 percent in January.
    Last week, the BOJ revised up its assessment of the economy
to say it was bottoming out, and held monetary policy steady. 
    The BOJ is expected to take action at its April 3-4 meeting
after the expected appointment of Haruhiko Kuroda, a vocal
advocate of aggressive easing, as governor later this month.
    Data last week showed the economy stabilized in the fourth
quarter after two quarters of contraction. Analysts project the
economy will grow around 2.0 percent in the fiscal year from
April, helped by a weaker yen and improving global demand.

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