Japan Machine Orders Rise More Than Estimated in November

Japan’s machinery orders rose more than expected in November, suggesting that companies were optimistic about the economic outlook as the yen weakened.

Orders, an indicator of capital spending, climbed 3.9 percent from the previous month for the second straight rise, the Cabinet Office said today in Tokyo. The median estimate of 24 economists surveyed by Bloomberg News was for a 0.3 percent increase. Large orders can cause volatile results.

Prime Minister Shinzo Abe last week unveiled a 10.3 trillion yen ($116 billion) stimulus package that Nomura Securities Co. forecasts will help deliver real annualized growth of 3.5 percent in the April-June quarter. Prospects for exporters may improve this year as the yen has fallen about 10 percent against the dollar since mid-November.

“Orders from non-manufacturers continued to increase, providing considerable support,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. and a former BOJ official. “Capital spending will probably recover gradually this year.”

Orders from manufacturers rose 3.9 percent from a month earlier, while those from non-manufacturers rose 6.2 percent for the fourth-straight gain.

Japan’s GDP shrank at an annualized 3.5 percent pace in the third quarter after contracting in the three months through June, meeting the textbook definition of a recession. The median estimate of economists surveyed by Bloomberg News is for a 0.6 percent contraction in the three months through December 2012, with growth in the three months to March seen at 1.6 percent.

Short Recession

“The current recession may end up being very short,” said Hideo Kumano, chief economist at Dai-Ichi Life Research Institute in Tokyo and a former central bank official. “The rapid depreciation of the yen may make companies more inclined to invest in the coming months.”

The yen has fallen amid expectations the central bank will increase cash infusions to jump-start growth and defeat deflation. The currency was at 88.23 per dollar as of 11:12 a.m. in Tokyo.

The Bank of Japan will adopt a 2 percent inflation target advocated by Abe at its Jan. 21-22 meeting, according to people familiar with officials’ discussions.

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