Japan’s core machinery orders decline 3.1% in April

The Dollar Business Bureau 

Japan’s core machinery orders in private-sector declined 3.1% in April compared to the preceding month, a fall for the first time in three months, due to a sharp decline in finance, insurance, and construction sectors, according to the Japanese government data.

The orders, excluding those for ships and utilities, stood at $7.6 billion (835.9 billion yen). The data is generally viewed as the indicator of capital spending in future by the Japanese companies.

The Japanese government’s Cabinet Office kept its basic analysis that the recovery was slow in machinery orders. In the month of March, the core machinery orders grew only 1.4%.

The non-manufacturing sector orders declined 5% to 471.5 billion yen, witnessing a decline for second straight month, indicating a weak demand for building equipment from construction industry and computers from finance and insurance sector.

Orders from the manufacturing sector grew 2.5% to 361.8 billion yen, marking the third straight monthly increase, in the wake of a strong demand for semiconductor-manufacturing and other equipment.

“The 3.1% fall looks steep, but growth remains solid in the manufacturing sector. With the manufacturing sector's orders continuing to increase, we don't believe machinery orders have been on a downtrend,” said a Cabinet Office official while explaining the reason for retaining the assessment.

The economy of Japan has been moderately recovering, pushed up by strong exports, mainly to other markets of Asia.

The demand for Japanese machinery in the international market, which indicates future exports, increased 17.4% to 993.2 billion yen.

Overall orders that include those from domestic public sector and overseas, surged 2.7% to 2.30 trillion yen, according to the data.

For the present quarter till June, orders from core machinery sector are likely to contract 5.9% compared to the previous quarter.

According to analysts, uncertainty remains over the trade and economic policies of the US under President Donald Trump, which may affect Japanese firms in making big investments.