Pedestrians walk in front of the Bank of Japan's headquarters in Tokyo on May 30, 2024. (Photo by Kazuhiro NOGI/ AFP)
TOKYO: Japan’s core machinery orders fell in April for the first time in three months, government data showed yesterday, due to a pullback from the prior month’s big jump, but the Cabinet Office says capital spending remains on track for a recovery.
The data followed the Bank of Japan’s decision last week to start trimming its huge bond purchases, with it due to announce a detailed plan next month on reducing its nearly US$5 trillion balance sheet.
Core orders fell 2.9% month-on-month in April, versus a 3.1% decline expected by economists in a Reuters poll, the first drop in three months. It is a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months.
In March, there had been a 19.4% gain by manufacturers and a 11.3% decline by non-manufacturers from the prior month.
The Cabinet Office left its assessment of machinery orders showing signs of picking up unchanged.
“Taken together, the core orders are firming up and heading to a recovery due to demands related with inbound tourism and rising wages,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
“We cannot expect much from overseas with the United States and European economies still struggling to cope with elevated interest rates and China grappling with its property market.”
External orders, which are not included in the core orders, grew 21.6% month-on-month in April after a 9.4% drop the previous month.
Japanese firms tend to compile big spending plans to boost factories and equipment but are often slow to implement them due to uncertainty over the economic outlook.
The weakening of the yen has not helped domestic capital investment much because of Japanese firms’ tendency to invest directly overseas where demand is stronger. — Reuters
