Surprise fall in Japan machinery orders
TOKYO: Japan’s core machinery orders unexpectedly fell in January from the previous month and dipped the most in five months, adding to worries about whether recent signs of economic recovery will be sustainable.
Japanese policymakers hope a recovery in capital spending will help drive growth in the world’s third-largest economy and pull it out of deflation and stagnation.
Core machinery orders fell 3.2 percent in January, sharply undershooting the economists’ median estimate of a 0.5 percent increase, Cabinet Office data showed on Monday.
That followed a rebound in December, when core orders rose 2.1 percent. While the data series can fluctuate widely, it is regarded as a leading indicator of capital spending in the coming six to nine months.
“The results were weak. I am somewhat worried, but machinery orders are volatile so it is necessary to watch for a while longer,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute (MRI). Compared with a year earlier, core orders, which exclude those of ships and electrical equipment, fell 8.2 percent in January — the biggest fall in eight months and larger than the analyst estimate for a 3.3 percent decrease.
The Cabinet Office maintained its assessment of machinery orders, saying the pick- up was stalling. Manufacturers surveyed by the Cabinet Office forecast core orders to rise 1.5 percent in January- March from the previous quarter.
The figure was seasonally adjusted from the previously estimated 3.3 percent increase. While recent Japanese data has been largely upbeat, the readings were still subdued and growth is still not solid enough to generate the sustained inflation that the Bank of Japan ( BoJ) needs to meet its 2 percent price target. Capital expenditure grew at the fastest pace in almost three years in the fourth quarter, but private consumption has remained stubbornly sluggish.
Exports have crept back into expansionary territory but are facing the risk of a rise in US trade protectionism. With the outlook still murky, the BoJ is expected to keep its policy settings unchanged at a board meeting later this week.