Machinery orders rise 10.5%

Core private-sector machinery orders rose a much larger than expected 10.5 percent in September on a seasonally adjusted basis, underscoring improving corporate appetite for fresh business investment amid pickups in exports and production.

Core machinery orders, which exclude volatile ones such as those for ships and from electric utilities, increased to ¥738.0 billion for the second straight month of increase.

The pace of increase was the fastest since January 2008 and compares with the average market forecast of a 3.1 percent rise in a Kyodo survey. In August the number rose 0.5 percent after falling 9.3 percent in July.

Core machinery orders are considered a key gauge for business investment about six months ahead.

"There are movements showing that the fall is starting to cease," the Cabinet Office said, upgrading its assessment on machinery orders for the first time since March.

The expansion was led by strong demand from nonmanufacturers.

Orders from manufacturers totaled ¥234.3 billion, down 0.1 percent for the first decline in two months, but those from nonmanufacturers surged 18.0 percent to ¥515.4 billion due to increased demand for mobile phones, communications equipment and agriculture-related machinery.

Overseas demand, an indicator of future exports, gained 25.9 percent to ¥583.9 billion, in stark contrast to a drop of 15.7 percent in August.

For the October-December quarter, the Cabinet Office projects orders to rise 1.0 percent.