Japanese economic outlook brightens

Optimism about Japan's economy grew on Tuesday as robust machinery orders data suggested sustained growth in capital spending, and both the government and Bank of Japan upgraded their monthly economic assessments.
The upgrades by Cabinet Office and the central bank, which also left monetary policy unchanged, followed a big upward revision in the International Monetary Fund's growth projection for Japan and backed expectations that April-June growth data on Friday would be strong, helped by a brighter picture for exports.
"Our judgement now shows the economy has almost broadly emerged from a stalled stage," BoJ Governor Toshihiko Fukui told a news conference after the bank slightly upgraded its economic assessment for the second straight month.
Signs of a slowdown in exports, the traditional engine for Japan's economic growth, had worried economists only a few months ago. But growing prospects of a stronger global economy and evidence of surprising strength in domestic demand - capital spending and consumption - have brightened the outlook.
Core private-sector machinery orders, a key gauge of trends in capital spending, jumped 11.1 percent in June from a month earlier, government data showed on Tuesday.
That was much better than a median forecast of a 6.1 percent rise in a Reuters poll of economists last week.
The core orders, which exclude those for ships and equipment at electric power firms and are regarded as an indicator of capital spending six to nine months ahead, were forecast in the government report to rise 0.9 percent from the previous quarter.
In April-June, orders were up 0.8 percent, confounding a government forecast three months ago of a 3.1 percent decline.
The April-June gross domestic product figures due on Friday could show the economy may outperform even that upgraded forecast.
The BoJ slightly tweaked the wording on the overall economic assessment in its monthly report on Tuesday, saying the economy was recovering amid progress in inventory adjustment in the information technology sector. Previously, it said the economy was recovering "albeit with" IT-sector adjustment.
The government also upgraded its view, saying the economy was emerging from a soft patch thanks to a recovery in household spending, as well as upturns in exports and inventories.