Japan’s machinery orders rose more than forecast in July even as weakness in exports and waning subsidies for auto purchases threaten to stifle economic growth.
Orders climbed 4.6 percent from the previous month, after gaining 5.6 percent in June, the Cabinet Office said Wednesday in Tokyo. The median estimate of 29 economists surveyed by Bloomberg News was for a 2 percent increase. Large orders can cause volatile results.
Wednesday’s reading and a pick-up in manufacturers’ confidence signal some resilience in an economy that Bank of America Merrill Lynch says is at risk of contracting this quarter. Japanese exports may benefit from U.S. and Chinese efforts to spur demand, with the Federal Reserve meeting this week and Premier Wen Jiabao saying Tuesday that his nation has ample fiscal and monetary room to support growth.
The yen has climbed about 7 percent against the dollar since mid-March, while still remaining below the post-war high reached in October last year. The currency traded at 77.76 per dollar as of 9:03 a.m. local time in Tokyo Wednesday.
Japan’s largest manufacturers turned optimistic for the first time in four quarters, according to a government index released Tuesday, even as subsidies for consumers’ purchases of energy-efficient vehicles wind down and a stand-off in parliament over government financing threatens to limit fiscal stimulus.
Japan’s central bank is due to meet Sept. 18 and 19 to decide whether the economy needs more monetary support. Growth was an annualized 0.7 percent in the second quarter, after a 5.3 percent expansion in the first three months of the year.
