Japan’s core private-sector machinery orders rose a seasonally adjusted 9.3 percent on month in November to their highest level in over five years, the government said Thursday, with many companies eager to bolster investment ahead of a planned sales tax hike.
The orders, excluding those for ships as well as those from utilities because of their volatility, came to 882.6 billion yen, the highest since July 2008, before the country’s economy waned against the backdrop of the global financial crisis, the Cabinet Office said.
The orders, widely regarded as a leading indicator of capital spending, increased for the second straight month, it said.
The government upgraded its basic assessment, saying orders are “on a growth trend.” Last month, it said the orders “have shown signs of moderately growing.”
The upturn suggested business investment, accounting for around 15 percent of Japan’s gross domestic product, will gain momentum for the next few months before the nation’s consumption tax rate is raised to 8 percent from 5 percent in April, analysts said.
But capital spending, which Prime Minister Shinzo Abe views as a pillar of economic growth, may weaken after the tax hike, in turn hurting the broader economy that is on the verge of overcoming nearly two decades of deflation, they added.