Japan’s machinery orders fell less than economists anticipated in March and are forecast to rise this quarter, signs that a stronger yen and slower global growth have yet to temper corporate spending plans.
Bookings decreased 2.8 percent from the previous month, a Cabinet Office report showed in Tokyo today, compared with a median 3.5 percent decline in a Bloomberg News survey of 29 economists. The government also forecast orders will climb 2.5 percent in the three months ending June 30, which would be the biggest advance in four quarters.
Japan’s government may report tomorrow that the world’s third-biggest economy returned to growth in the first quarter after shrinking in the final three months of last year, a Bloomberg News survey of analysts shows. Two consecutive quarters of rising machinery orders signal capital spending will support growth even as reconstruction demand from last year’s earthquake fades, economist Naoki Iizuka said.
“This is very good news,” Iizuka, a senior economist at Mizuho Securities Co. in Tokyo, said of the government forecast. “The Japanese economy will be able to enjoy relatively stable growth compared with other advanced economies” thanks to rebuilding from last year’s earthquake and corporate outlays, he said.
The yen traded at 80.41 per dollar at 12:32 p.m. in Tokyo. That compares with a post-World War II high of 75.35 in October and this year’s low of 84.18 on March 15. Finance Minister Jun Azumi says that he’s watching for speculative moves in the currency and is ready to take immediate action as needed.
Not all economists are convinced sustained gains in orders will support an economy under risk from a stronger yen and ongoing turmoil in Europe. The Nikkei 225 Stock Average fell 1.2 percent as public and political opposition to austerity measures in Greece add to the risk that the nation will exit the euro, disrupting markets and the global economy. Nippon Sheet Glass Co. (5202), which gets 39 percent of its sales in Europe, slumped to its lowest level on record yesterday.
“The recovery in business investment is good news, but it’s unlikely to be strong enough to help accelerate growth,” said Hidenobu Tokuda, an economist at Mizuho Research Institute Ltd. in Tokyo. “Companies are reluctant to increase spending because of the strong yen.”
Post-election attempts to form a ruling coalition in Athens broke down yesterday after nine days, sending Greeks back to the polls next month with surveys giving the lead to an anti-bailout party that would tear up the conditions attached to aid for the debt-stricken nation.
In Japan, gross domestic product rose an annualized 3.5 percent in the first quarter, compared with a 0.7 percent contraction in the final three months of 2011, according to the median estimate of 27 economists surveyed by Bloomberg News. The economy got a boost from earthquake rebuilding and incentives for the purchase of energy-efficient cars.
The Cabinet Office will release the number at 8:50 a.m. in Tokyo tomorrow.
As the boost from reconstruction wanes, the pace of the expansion may slow. Growth may be 2.2 percent in the second and third quarters, and 1.7 percent in the final three months of the year, according to the average forecast of 40 economists in a survey by Japan Center for Economic Research released yesterday.
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