Orders for manufacturing equipment climbed 10.2 percent, the Cabinet Office said. Service companies increased orders 8.8 percent. Machinery orders indicate business investment in the next three to six months.
Exports to China and Europe, we should remember, surged to a record in October prompting companies to spend more on factories and equipment. And just to remind us of this I am again reproducing the key chart, which indicates just how the composition of Japanese exports is changing, with Europe and China more than making up for an absolute and relative decline in the importance of exports to the US (on all of which see this post here).
Sales overseas, we should remember, were responsible for almost all of Japan's economic growth in the third quarter. But we should also remember that the Economies of Japan's European customers are now slowing, while China is entering a "battle of the titans" type confrontation with an inflation process which is increasingly getting out of control, with an uncertain prognosis over the immediate and mid-term future.
