Japan: Core machinery orders deteriorates in June
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—decreased 1.5% in month-on-month seasonally-adjusted terms in June, which contrasted May’s 7.8% increase.
On an annual basis, machinery orders rose at a quicker rate of 18.6% in June (May: +12.2% yoy), the best result since May 2015. Accordingly, the trend improved sizably, with the annual average variation of machinery orders coming in at an over one-year high of minus 1.4% in June, up from May’s minus 5.0%.
June’s report also included machinery manufacturers’ forecasts for July–September 2021, which projects a 11.0% increase in core machinery orders over the period, thus pointing towards improving optimism regarding capital spending after Q2’s 4.6% rise in machinery orders. However, the order forecast survey took place in late June, amid falling Covid-19 cases and before late July’s announcement of a further state of emergency, As such, capital expenditure will likely have been lowered than expected so far in Q3, as daily infections surged throughout July and August.