TOKYO (AP) — Japanese core machinery orders — a key indicator of capital spending — posted their biggest gain in seven years in January, but analysts were wary about their outlook because the gain was due to one-off factors.
Machinery orders, which are often used to gauge the outlook for business investment, jumped 19.6 percent in January from the previous month, Japan's Cabinet Office said Monday.
While that was much higher than the 3.1 percent rise projected by economists and the first increase in three months, analysts cautioned that January's rise was due to several one-time large deals.
"The result is too strong and shouldn't be taken too optimistically," said Shiko Research Institute economist Norio Miyagawa. "Orders growth may continue, but its speed will likely decrease ahead with larger downside risks" due to a slowdown in the U.S. economy.
The jump in machinery orders was the sharpest since August 2000, when they rose 20.8 percent, the Cabinet Office said.
Demand from overseas also increased for the first time in three months, jumping 43.1 percent from a month earlier. This was mainly due to a single large order for boilers and turbines, the survey showed.
Meanwhile, core orders slipped 3.2 percent on month, following a 2.8 percent decline in November. Core orders exclude those from electric power companies and those for ships, which are often a source of volatility in the overall data due to their large sizes.
Unadjusted core orders in January climbed 11.4 percent from a year earlier.
Machinery orders are widely regarded as a leading indicator of corporate capital investment, which accounts for about 15 percent of Japan's gross domestic product.
