JAPAN’S economy was expected to expand faster than initially projected in the first quarter, helped by a pickup in capital spending, a Reuters poll showed, suggesting firms’ business investment supports gradual economic recovery.

    Data due this week is also seen as likely to show Japan’s core machinery orders slipped in April, but analysts see them gradually regaining momentum, reflecting positive corporate earnings.

    “Growth data for January-March will likely confirm a view that the economy is gradually recovering, but the data will not be something to be happy about,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

    “There is a risk that the economy over April-June will not be good, especially for private consumption.”

    The economy was to expand an annualized 2.7 percent in the first quarter, an upward revision of the initial estimate of a 2.4 percent, the poll of 25 analysts found.

    This would translate into a quarter-on-quarter increase of 0.7 percent compared from an initial reading of 0.6 percent.

    Capital expenditure, one of the components of GDP, is expected to have risen 2.3 percent for the quarter from a preliminary 0.4 percent increase, the poll showed.

    The Cabinet Office will release the revised GDP data today.

    The poll also found core machinery orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, fell 2 percent in April from a 2.9 percent gain the previous month.

    From a year ago, core orders are seen to have fallen 1.3 percent, the poll showed.

    “In the long run, we see firms’ capital spending picking up,” said Hidenobu Tokuda, economist at Mizuho Research Institute. “Firms’ appetite for business investment is solid, underpinned by positive earnings.”

    The Cabinet Office will release the machinery orders Wednesday.

    Japan’s current account balance is expected to show a surplus of 1.6964 trillion Japanese yen (US$9 billion) in April as the trade balance likely stayed in surplus partly due to lower oil prices and a soft yen probably boosting income gains from overseas earnings.

    It would be the 10th straight monthly surplus.(SD-Agencies)