According to the Ministry of Japan, machine orders jumped to 15% on a month-over-month basis far above expectations, which is considered the highest growth since January 2003. The analyst consensus was for a 1.9% rise.
The year-over-year pace rose by 8.4% while there was expected the decrease by 3.8%. This surprising data concerned the majority of analysts, who suspected that Japan changed the statistical procedure. The analysts think that this new procedure is falsification of data.
At the moment Japan government is trying to prove that country’s economy is recovering and doesn’t need monetary policy. The Prime Minister Shinzo Abe and Bank of Japan Governor Haruhiko Kuroda was trying to assure everybody that negative rates would help the economy. However, the market proves otherwise.
Japanese bond market experienced serious problems even before the tapering program introduction in 2013, but after the Bank of Japan adopted negative rates the real collapse started.
In March Kuroda reported that negative rates together with the tapering program might have a negative impact on financial institutions’ income, but as a result would help to cope with deflation and reach the target inflation level of 2%.
Thus, the hike in machine orders proves that central bank policy works and just a little more time is required.
