Japan orders fall more than expected
TOKYO: Japan’s core machinery orders fell more than expected in January on the back of a weak manufacturing sector, data showed on Monday, prompting the government to downgrade its view on the indicator for the first time in more than a year.
The data, released on Monday by the Cabinet Office, follows recent data that highlighted concerns about the sluggish recovery in the world’s fourth-biggest economy.
It comes as the Bank of Japan (BOJ) kicks off its two-day monetary policy meeting, although core machinery orders data is unlikely to have a significant bearing on the central bank’s decision, according to an economist.
Core orders, a highly volatile data series regarded as a leading indicator of capital spending in the six to nine months ahead, fell 1.7 per cent in January from the previous month, the data showed.
The decline was bigger than a 1.0 per cent drop expected by economists in a Reuters poll and followed a 1.9 per cent gain in December.
Weak production against a backdrop of weak demand for goods and production suspension at automakers and uncertainty over the impact of the New Year’s Day earthquake in Noto Peninsula might have motivated manufacturers to push back capital investment, said Kota Suzuki, an economist at Daiwa Securities.
“The risk of a slowdown in future capital investment will be significant,” Suzuki said.
The government lowered its view of machinery orders for the first time since November 2022, changing to “showing some weakness” from “stalling”.
It made the downward revision after factoring in the October-december threemonth average on the data, a Cabinet Office official said.
On a year-on-year basis, core orders, which exclude volatile numbers from shipping and electric utilities, contracted 10.9 per cent, slightly smaller than the forecast 11.2 per cent slump.