Japan current account seen back in surplus, machinery orders lower

TOKYO: Japan's current account balance probably swung back to a surplus for the first time in five months in February, a Reuters poll showed, helped by hefty returns from investments overseas and as import growth slowed.

Machinery orders are expected to have slipped in February after a big jump in the previous month and as companies stay cautious about the economic outlook heading into the new fiscal year, the poll also showed.

Japan likely posted a current account surplus of 628.0 billion yen ($6 billion) for February, the first surplus since September, according to the Reuters poll of 26 economists.

That would follow a record deficit of 1.589 trillion yen in January on the back of a bulging trade deficit.

Analysts say Japan's current account surplus is unlikely to grow substantially for the foreseeable future as the nation's energy import bill stays high and as many manufacturers have moved factories overseas, reducing exports.

"The trade balance will likely stay in deficit partly as a result of structural problems and higher energy imports," said Yasuo Yamamoto, senior economist at Mizuho Research Institute. "So the current account surplus will unlikely increase much and stay in narrow ranges."

The Ministry of Finance will release the current account data at 8:50 a.m. on April 8 (2350 GMT on April 7).

Core machinery orders, a leading indicator of capital spending, are expected to have fallen 3.0 percent month-on-month in February, after a 13.4 percent jump in January.

"I think machinery orders are on a recovery path. Since their level was high in January, a small fall (in February) is not necessarily considered a negative," said Yoshimasa Maruyama, chief economist at Itochu Economic Research Institute.

"But it is hard to say firms are active about increasing their capital spending in the first half of new financial year."

Compared with a year earlier, core machinery orders, a highly volatile data series, are expected to have risen 17.6 percent in February after a 23.6 percent gain in January.

The Cabinet Office will announce the machinery orders data at 8:50 a.m. on April 10 (2350 GMT on April 9).

The Bank of Japan's latest "tankan" survey showed that big firms expect to increase capital spending by just 0.1 percent in the financial year that started this month, down from a 3.9 percent increase in spending planned for the fiscal year that ended in March.