Japan's core private-sector machinery orders jumped by much more than expected in May, the government reported yesterday, easing concerns about a slowdown in corporate capital spending growth.
The upbeat data rekindled speculation about a possible interest rate rise by the Japanese central bank next month as part of its intention to tighten monetary policy gradually in line with the economic recovery.
The core orders, seen as a key leading indicator of corporate capital spending, rose by 5.9 percent in May, beating market forecasts for a gain of 2.6 percent after April's month-on-month rise of 2.2 percent.
Year-on-year, core orders -- which exclude volatile components such as power companies and ships -- were down 3.1 percent in May, after a drop of 9.0 percent in April, the Cabinet Office said.
Economists said the data supported the Bank of Japan's case for another interest rate rise from 0.5 percent, although there was also caution about whether the rise in orders marked a change in the weak trend of the past year.
The report "helped soothe the anxiety about the cyclical trend of corporate capital spending, thereby removing one of the main obstacles to the widely-conjectured interest rate hike in August," NLI Research Institute senior economist Taro Saito said.
Other obstacles to a rate rise include persistent deflationary pressures, government resistance to another hike and the potential for political instability after the July 29 upper house elections, analysts said.
After the data, the government upgraded its assessment of the core orders for the first time in 11 months, saying the trend was now flat. It had previously said that the orders were weakening somewhat.
But a Cabinet Office official said that orders for semiconductor-processing equipment and tools for making liquid-crystal-displays were still sluggish.
"We are still worried about the trend of overall machinery orders," the official said.
Machinery orders placed by the manufacturing sector were 15.3 percent higher in May than in April, with orders by non-manufacturers down 1.8 percent.
The Cabinet Office forecast that core orders would be 11.8 percent lower in the three months to June compared with the previous quarter.
Japanese companies have been investing heavily in new plants and equipment as they enjoy the fruits of the economy's recovery from its long slump but the pace of spending growth appears to be slowing this year.
"Unless non-manufacturers and small and medium-size firms start spending more on building factories and boosting production capacity, it will be difficult for corporate-sector capital spending to gain further momentum," Norinchukin Research Institute economist Takeshi Minami said.
"After having spent heavily in recently years, there is only limited scope for large manufacturers to boost capital investment any further," he said.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to