Reuters/Tokyo


Japan’s leading indicator of capital expenditure probably rebounded in November, a Reuters

poll showed, as strong corporate earnings on the back of a weak yen encouraged more firms

to spend.
The nation’s current account balance will likely show a modest surplus in November helped

by a lower trade deficit due to falling oil prices and a rise in income from overseas

investment due to the soft yen.
Core machinery orders, a highly volatile data series regarded as an indicator of capital

spending in the coming six to nine months, likely rose 5% in November from the previous

month, the poll of 21 analysts showed.
That compared with a 6.4% fall in October and followed a 2.9% rise in September.
Compared with a year earlier, core orders probably fell 5.8% in November, the poll found,

down for the second straight month.
Still, the economy is expected to emerge from recession in the last three months of 2014,

after unexpectedly contracting following a sharper-than-expected drop in consumption

following a sales tax hike last April.
“The appetite for capital spending among firms, especially the big manufacturing sector,

is on the rise as the impact from the yen’s weakness on boosting corporate earnings is

big,” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.
Analysts say firms’ capital spending is expected to recover but only at a modest pace.
“We expect a moderate increase (in core machinery orders) although there are some weakness

seen reflecting stalling domestic demand and a stagnant volume of exports,” said Takeshi

Minami, chief economist at Norinchukin Research Institute.
The Cabinet Office will release the data on January15.   The poll also showed the current

account balance, which will be released on Monday, is expected to show a surplus of

¥133.2bn ($1.12bn) in November, which would be a five straight monthly surplus.
“Falls in oil prices contributed to a narrowing trade deficit and the weak yen helped

gains in the income balance,” said Tsunoda at Shinkin Central Bank Research Institute. But

the expected surplus for November will be smaller than a surplus of ¥833.4bn in October.
Wholesale prices, which measures the price companies charge each other for goods and

prices, likely rose 2.1% in the year to December following a 2.7% gain in November, the

poll showed.