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Japan Investment April 2023

Japan: Core machinery orders bounce back in April

Core machinery orders—which cover the private sector, exclude volatile orders and are a leading indicator for capital spending over the coming three-to-six-month period—expanded 5.5% month-on-month in seasonally adjusted terms in April (March: -3.9% mom), beating market expectations.

On an annual basis, machinery orders plummeted 5.9% in April, which was significantly greater than March’s 3.5% fall. Accordingly, the trend pointed down, with annual average growth in machinery orders coming in at 2.1%, down from March’s 4.1% reading.

Last month, the statistical office forecasted that core machinery orders would rise 4.6% quarter on quarter in Q2. April’s print means the economy is on track to meet that forecast.

Analysts at Nomura said:

“[There was] some weakness in manufacturing and processing sectors […] orders from manufacturers [were] down for a second consecutive month, down 3.0% m-m […]. It may be that capex, particularly in sectors with high export weightings, is weakening as companies prepare for slowdowns in overseas economies, particularly the US.”

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