By Daniel Leussink

TOKYO (Reuters – Japan’s core machines orders rose again in November. The government released Monday data. It is a sign of how resilient corporate capital spending has remained despite the pressures from rising raw materials prices.

Core orders are a crucial indicator of capital spending and the gain could provide relief for policymakers who hope that corporate investment will lead to a recovery driven by private demand in the third largest economy in the world.

According to the Cabinet Office, core orders, an extremely volatile data series that is used as an indicator for capital spending over the following six to nine months, increased by 3.4% in November compared with October. This was the second consecutive month of growth, according the data.

The increase beat the median economist estimate of 1.4% and was followed by a 3.8% gain in previous months.

Japanese businesses might consider being cautious when increasing their spending, due to rising raw material, fuel, and transportation costs. These higher prices are pushing up inflation rates and squeezeing margins.

Core orders, which are not volatile numbers like shipping, rose 11.6% in November compared to a year ago, Cabinet office data showed.

According to the data, manufacturers’ orders rose by 12.9% month-on–month. This was offset by a 0.8% decline in non-manufacturers.

After seeing signs of pick-up, the government increased its assessment on machine orders. The government had stated previously that an increase in machinery orders showed signs of pick-up.

Japan’s economy contracted in the third quarter last year. It is now expected that it will grow in the October-December quarter.

After the removal of coronavirus restrictions, it is expected that the economy will grow by 6.5% annually in quarter 3.