Japan's core machinery orders rose unexpectedly in February, reinforcing expectations that rebuilding in the earthquake-battered north-east will bolster corporate spending and economic recovery although risks loom from a resurgent yen and wobbly overseas economies.
Despite the positive surprise from the volatile data, analysts said the Bank of Japan was likely to remain under pressure to ease policy after it stood pat on Tuesday, especially given expectations that consumer price growth will remain short of its new inflation goal.
Core machinery orders, considered a leading indicator for capital spending, rose 4.8 percent in February from the previous month, beating the median forecast for a 0.8 percent decline. The government upgraded its assessment on machinery orders for the first time in eight months, saying they were increasing moderately, compared with the previous view that they were moving sideways.
Wednesday's data also showed that, compared with a year earlier, orders rose 8.9 percent in February, exceeding the median forecast for a 3.1 percent annual increase. Orders from manufacturers rose 16.0 percent from the previous month, boosted by demand related to the shipbuilding and chemical sectors, while non-manufacturers' orders gained 2.3 percent as smartphones fuelled orders for telecommunications equipment, a Cabinet Office official said. Japan's bank lending rose 0.8 percent in March from a year earlier, following a 0.6 percent increase in the year to February, separate data from the Bank of Japan showed.
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