Increasing machine orders in Japan adding to signs of recovery in the nation's manufacturing sector

Japan's machine orders inclined in September more than analyst's estimates amid improvements witnessed in the nation's manufacturing sector which showed clear signs of recovery even if production levels remains lower than last year's levels. 

Japan economy has announced the monthly figures for Machine orders which showed a gigantic boost of 11.0% during August, compared with the prior reading of -8.2%, and on top of the expectations of 3.9%. 

Moreover, the yearly figures for Machine orders was declined to 2.1% compared with the prior reading of 4.0%, however it came above forecasts of -3.6%. 

Exports also rose and started participating effectively in the recovery process, having overseas shipments soard during this period. Further, the demand from China that is leading recovery in the Asian region helped Japan's exporters to offset losses incurred by the end of last year and the beginning of this year. 

We can expect that if capital spending continued to improve, we should see conditions in the labor market getting better, keeping in mind that unemployment fell. Household spending will increase as income levels are moving forward, that may help to ease the decline in prices and support the economy to fight deflation that continued to weigh on economic activity. 

On the other hand, Japan's economy continued to show many fundamental data that confirmed it has many alternatives ways to record an expansion during these months as investment sector picks up. 

Furthermore, the government in Japan is working to keep the recovery going, which work to cope the yen's appreciation, where Bank of Japan (BOJ) has intervened into the market to sell the yen against the dollar to cool the yen's advance, as the substantial rise in the Japanese yen against the dollar and its all major counterparts. 

The Bank of Japan noted that the economic recover bas returned to normal level and now is picking up amid the sluggish global economy, while the economy is facing a downward pressure as the European financial crisis beside the sluggish US economy. 

Yet, Japanese economy success to start the recovery phase this quarter as the industry sector continued to introduce more cheerful signs these days after manufacturers restored their production cycle after the massive quake that hit the nation during the first quarter of this year.

New positive signs for the economic recovery cycle in New Zealand 

New Zealand economy is showing great signs of economic recovery to get rid from the effect of earthquake that hit the country as exports rose significantly, especially from dairy products and meat from countries of the Asian region, especially from China.

The New Zealand economy is starting the recovery phase this period, after the home building permits accelerated during the month of January by the most in almost two years, reflecting the residential construction rebound after the earthquake. 

The New Zealand economy issued today data regarding the building permits for the month of May, which accelerated to 2.2% compared to the previous drop by 1.6%, while the market expectations referred to 3.2%.

New Zealand’s goods prices rose dramatically which is positive for growth rates and profits, but it’s a negative effect on the currency of New Zealand, led to decline in exports, in addition to that high prices may be dangerous if growth rates continue to climb this way. 

On the other hand, New Zealand's trade balance registered a surplus in May less than expected as it recorded a surplus of NZ $605 million compared to the previous surplus which amounted to $1113 million New Zealand dollars, which was expressed by Mr. Alan Pollard, President of the Central Bank, that higher New Zealand dollar led to a decline in export earnings, which may explain the reason for this decline in the surplus. 

Retail sales is one of the important indicators that indicate consumers spending, where we can see that the improvement in New Zealand's retail sales index in November gives further upbeat signals that the economy might recover and fight the financial crisis before the first half of 2011 along with the borrowing costs near their lowest levels. 

In the meantime New Zealand's central bank monitors the global situation like any other central bank, especially in the face of rising oil prices and food commodities in addition to the current instability stemming from the Greek crisis and the sluggish U.S. economy, which impacted other global economies, especially after the decline in consumer confidence in the United States. 

Finally, through these global events linked to all global economies, and what we have said of the high oil and commodity prices and fluctuating global economy, which may worry monetary policy makers in New Zealand to prepare for any potential inflationary risks in the coming period. 

Outlook for the World's Third-Largest Economy Improves Despite the March Quake

The outlook for the Japanese economy has improved as retail sales came better than expected during May, which means that the world's third largest economy started to rebound in the second half of the year after the massive quake that hit the nation on March. 

Japan's retail trade seasonally adjusted rebounded to 2.4% in May, from the previous 4.1% during the month of April, while the actual reading came better than the analysts' expectations that referred to 1.2%. 

On the other side, annualized Japan's retail trade showed an actual -1.3% in May, better than both the previous reading of -4.8% and anticipations of -2.2%. 

Japanese large retailers' sales dropped by 2.4% during May, more than both previous and expected readings of -1.9%. 

However, the Bank of Japan raised the assessment for the economy this months saying "the economy is showing signs of recovery" after it was "stopped worsening" while Japanese companies are still seeking to increase their investment to exit from the consequences of the worst financial crisis, adding that the economic recovery in Japan is on the track. 

The Bank of Japan upgraded its monthly economic assessment for the first time since February, while the economy will return to a moderate recovery in the second half of the fiscal year through March 2012. As for the government's efforts, Mr. Shirakawa, governor of the Bank of Japan, and his board, decided to keep the benchmark interest rate to "virtually zero," a range of 0.0% to 0.10%, to support the economy to exit from its hurdle phase. 

Furthermore, the Japanese economy has witnessed some improvements after the March quake, where the industrial sector increased less than market expectations in April, adding the Japanese companies began their production process, signaling that the economic recovery will start its upside movement in the second half of 2011. 

From the BOJ view, the world’s third-largest economy will probably expand 3.4% in the year starting April 2012 as reconstruction projects will boost demand, after contracting a projected 0.3% this fiscal year.