Sharp Rise in Japan's Machinery Orders May Alleviate Concerns Over Domestic Demand

Sharp Rise in Japan's Machinery Orders May Alleviate Concerns Over Domestic Demand

Japan's machinery orders surged 7.7% in February, the most in a year, surpassing economists' expectations, per Cabinet Office data. Takeshi Minami, chief economist at Norinchukin Research Institute, noted that firms, buoyed by increased profits and wages, are ramping up investment. However, risks persist, including potential oil price spikes from Middle East tensions. Despite a 1.8% year-on-year decline, solid capital spending signals may counterbalance concerns over weakening domestic demand. This growth comes amid yen depreciation, but despite monetary policy shifts, the Bank of Japan remains cautious, considering factors like capital spending as it aims for normalization.