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Japan Investment February 2022

Japan: Core machinery orders contract at sharpest rate since April 2020 in February

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—collapsed 9.8% in month-on-month seasonally-adjusted terms in February, which was a deterioration from January’s 2.0% decrease and far lower than market expectations. The result marked the worst reading since April 2020, and was driven by tumbling non-manufacturing machinery orders.

On an annual basis, machinery orders rose at a more moderate pace of 4.3% in February (January: +5.1% yoy). Meanwhile, the trend improved significantly, with the annual average growth of machinery orders coming in at 8.0%, up from January’s 7.1%.

Looking forward, the Ukraine crisis and Covid-19 turmoil in China could continue to keep machinery orders subdued in the coming months.

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