Japan’s Core Machine Orders Up 2.8% In December: Official Data

By Bhaskar Prasad | February 06 2013 11:57 PM

Japan’s core machinery orders posted a better-than-expected rise in December compared with the previous month, indicating that manufacturing production in the country is improving.

REUTERS

A picture illustration shows Japanese 10,000 yen notes featuring a portrait of Yukichi Fukuzawa, the founding father of modern Japan, taken in Tokyo Aug. 2, 2011.

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According to data released by the Cabinet Office on Thursday, Japan’s core machinery orders, which measure the change in the total value of new orders placed with machine manufacturers, excluding ships and utilities, increased by 2.8 percent in December following a 3.9 percent gain in November. December's gain was significantly better than analysts’ estimate of a 0.7 percent decrease.

This report comes after it was revealed earlier this week that Japan's monetary base rose in January compared with the same month last year, indicating that the monetary easing policies are leading to an increase in the amount of currency in circulation, which, in turn, results in reviving economic growth.

According to the data released Monday by the Bank of Japan (BoJ), the country’s monetary base, which measures the change in the total amount of domestic currency in circulation and current account deposits held at the central bank, advanced 10.9 percent in January following an 11.8 percent rise in December.

Last month, the BoJ raised the inflation target to 2 percent from 1 percent and introduced an open-ended asset-purchasing program as part of its aggressive monetary stimulus measures intended to revive the economic growth momentum. The central bank confirmed that it would pursue the monetary easing policy measures aimed at achieving the price stability target at the earliest possible time.

Beginning January 2014, the central bank will commence buying 13 trillion yen ($145 billion) in assets every month, which will include 2 trillion yen in Japanese government bonds. The central bank has raised concerns that Japan’s economy remains relatively weak.

Meanwhile, the data released last week by the Ministry of Economy, Trade and Industry showed that Japan’s retail sales, which measure the change in the total value of inflation-adjusted sales at the retail level, rose 0.4 percent in December compared with the same period last year, but down from the 1.3 percent increase reported in November.

Policymakers in Japan are under pressure to loosen the monetary policy further to revive the economy. Investor confidence rose after the Liberal Democratic Party, led by Shinzo Abe, who supports aggressive monetary easing measures, won the general elections last December.