Japan: Core machinery orders edge down in September
November 12, 2020
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—fell 4.4% on a month-on-month in seasonally-adjusted terms in September, which contrasted August's 0.2% increase.
On an annual basis, machinery orders dropped 11.5% in September, a milder decrease than August’s 15.2% fall and the best result since March. Meanwhile, the trend pointed down, with the annual average variation of machinery orders coming in at minus 9.0% in September, down from August's minus 7.4%.
September’s report also included machinery manufacturers’ forecasts for October–December 2020, which projects a 1.9% decline in core machinery orders over the period. The spike in Covid-19 cases in Europe and the U.S. in recent months likely weighed on the outlook.
Regarding September’s reading, economists at Nomura commented:
“We think a resurgence in COVID-19 cases in Japan from July led to weakness in orders from non-manufacturers. On the other hand, the number of new COVID-19 cases in the West in Jul-Sep was, generally speaking, lower than before, and data such as manufacturing PMI readings have shown a recovery in overseas economies. We think these differences in degree of economic recovery between Japan and elsewhere are reflected in the machinery order data.”
Author: Stephen Vogado, Economist