Japan core machinery orders up 2.9% in March

TOKYO – Japan’s core machinery orders, a leading indicator of corporate capital spending, posted a surprise rise in March despite the devastating earthquake and tsunami, data showed Monday.

The core private-sector machinery orders grew 2.9 percent from February, beating market expectations of a fall of more than nine percent due to the severity of the March 11 disaster.

The positive core data, which exclude volatile demand from power companies and for ships, reversed a drop of a revised 1.9 percent in February, the Cabinet Office said.

Even as the March 11 earthquake and tsunami disrupted supply chains nationwide and lowered consumer sentiment, solid demand from the non-manufacturing sector helped lift overall machinery orders.

Orders from manufacturing companies in March fell 0.4 percent but orders from non-manufacturers surged 7.1 percent.

Core machinery orders for the three months to March rose 3.5 percent from the previous quarter and are expected to rise a further 10.0 percent in the April-June term, according to the Cabinet Office.

The March disaster is expected to have a severe impact on the overall economy but it is also expected to produce a spike in orders for the massive reconstruction work that will be necessary.

Dow Jones Newswire contributed to this article