Japan's machinery orders jump in Oct, rebounding from previous month's drop

TOKYO: Japan's core machinery orders rebounded sharply from the previous month's drop in October, the government said on Wednesday, in a welcome sign for an economy recovery emerging from a deep coronavirus slump.

The jump in core orders indicates resilience in corporate spending, which policymakers hope will improve to boost the world's third-largest economy's recovery from the coronavirus pandemic.

Core machinery orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, soared 17.1% in October, recouping the previous month's 4.4% drop.

The increase, the largest month-on-month rise since comparable data became available in 2005, was much better than a 2.8% expansion forecast by economists in a Reuters poll.

By sector, orders from manufacturers rose 11.4%, boosted by non-ferrous metals, while those from non-manufacturers advanced 13.4%, led by finance and insurance, the Cabinet Office data showed on Wednesday.

The government raised its assessment on machinery orders, saying they had stopped falling.

Japan's cabinet on Tuesday approved a fresh $708 billion economic stimulus package to boost the economy.

The package includes about 40 trillion yen ($384.36 billion) in direct fiscal spending, while also targeting investment in new growth areas such as green and digital innovation.

Japan's economy has been recovering from the shock of the coronavirus mainly thanks to rebounds in exports and consumption in the third quarter.

But some policymakers, including the central bank, are worried about a slowdown in capital spending, which threatens to hurt domestic demand.

From a year earlier, core machinery orders, which exclude those for ships and electricity, rose 2.8% in October, beating an 11.3% decline expected by economists.