Japan core machinery orders up

Japan's core machinery orders rose for the first time in four months in December and firms forecast an increase in orders for the first quarter, boding well for capital spending as the economy emerges from a lull. But the 1.7 percent rise in December core orders, a highly volatile series seen as a leading indicator of capital expenditure, was smaller than a median forecast of a 5.0 percent increase, suggesting that companies will increase spending only slowly with any economic recovery seen moderate.
In a sign that a spike in commodity prices was pushing up raw material costs for companies, wholesale prices rose 1.6 percent in the year to January, marking the fastest pace of gains in more than two years, Bank of Japan data showed on Thursday. "Machinery orders have turned up but still lack momentum, suggesting the economy will likely show only a weak rebound in the January-March period," said Takeshi Minami, chief economist at Norinchukin Research Institute. Manufacturers surveyed by the Cabinet Office have forecast that core orders, which exclude those for ships and machinery at electric power firms, will rise 2.7 percent in January-March from the previous quarter, data showed on Thursday.