TOKYO, Feb 12 - Orders for machinery at Japanese firms far exceeded expectations in December, helped by strong demand for digital electronics goods and confirming expectations of strong economic growth at the end of last year. Figures released on Thursday also showed, however, that the government expects a slight decline in orders in the first three months of 2003. Core private-sector machinery orders, a key gauge of trends in capital spending, rose 8.1 percent in December from a month earlier, seasonally adjusted, much higher than the median forecast for a two percent rise in a poll. The government forecast orders would fall a slight 0.2 percent in the January-March quarter. "Although the December figures were stronger than market expectations, the January-March forecast suggests that the pace of recovery could slow down a bit," said Takashi Yamanaka, economist at UFJ Bank.
"That is not to say that the recovery itself will stop, but the rapid pace seen towards the end of last year could become slower." The figures for the end of last year confirm other recent data showing a pickup in the Japanese economy. With exports growing thanks to strong demand from China, companies have increased investment, boosting demand for machinery. Good domestic demand for digital electronics items such as DVD players and plasma televisions also helped, lifting industrial output 3.6 percent in October-December from the previous quarter. Gross domestic product (GDP) data for October-December, due next week, is seen showing growth of about three to five percent on an annualised basis, according to economists. Machinery orders rose 11.3 percent in the October-December quarter over the previous three months. The government upgraded its view on machinery orders, saying they were improving. It had previously said orders were increasing gradually. Core orders, which exclude those for ships and equipment at electric power firms, are regarded as an indicator of capital spending in the coming six to nine months, although the data tends to be volatile.//