Government cuts assessment after September core machinery orders fall 3.3 percent

Date : 2016-11-11  | From :

Japan’s core private-sector machinery orders fell a seasonally adjusted 3.3 percent in September from the previous month for the second consecutive month of decline, prompting the government to lower its assessment for the first time in four months, it said Thursday.



The orders, widely viewed as a leading indicator of future capital spending, totaled ¥843.7 billion, the Cabinet Office said. September’s decline followed a 2.2 percent fall in August.


The government now projects orders will shrink 5.9 percent during the three months through December from the previous quarter, when a 7.3 percent rise was logged.


Machinery orders had been picking up, but have come to a standstill, the Cabinet Office said in its basic assessment on the data.


The bigger-than-expected decline in September reflects decreased orders from food manufacturers, as well as telecommunication and information services firms.


“The stable orders that had supported growth in June and July were absent, but there was nothing to cover their loss,” a Cabinet Office official said in a briefing.


Asked about the impact of Donald Trump’s victory in the U.S. presidential election Tuesday on Japanese capital investment, the official said currency moves should be watched carefully following initial turbulence in financial markets, as well as the possibility the world’s largest economy could move toward protectionism under Trump’s leadership.


Hiroshi Watanabe, senior economist at SMBC Nikko Securities Inc., said machinery orders remain “stable” from the medium- to long-term viewpoint, citing recent recoveries in orders of export-oriented electronics and vehicle sectors. But the overall orders still “lack vigor,” he said.


“The yen’s rise and concerns over a slowdown in emerging economies have prompted companies to postpone capital investments even though they are needed,” Watanabe said, adding that unless the yen starts surging again, there will likely be solid orders for capital investment going forward.


Orders from the manufacturing sector decreased 5 percent to ¥335.5 billion in September, while those from the nonmanufacturing sector fell 0.9 percent to ¥510.3 billion.


Total orders, including those from the domestic public sector and abroad, grew 0.9 percent to ¥2.08 trillion.


Overseas demand for Japanese machinery, an indicator of future exports, climbed 1.4 percent to ¥785 billion.

View more machinery:

apparel machinery

packaging machinery