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Japan Investment January 2022

Japan: Core machinery orders fall at sharpest pace in nearly a year in January

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 2.0% month-on-month in seasonally-adjusted terms in January (December: +3.1% mom). The figure marked the first decline in five months and the weakest reading since February 2021.

On an annual basis, machinery orders grew 5.1% in January, matching December’s expansion. Meanwhile, the trend improved, with the annual average growth of machinery orders coming in at 7.1%, up from December’s 6.8% reading.

Commenting on the outlook, Yuki Takashima and Takashi Miwa, economists at Nomura, started:

“We see a risk that core machinery orders in January–March will ultimately come in below the projections for the quarter, in part because the current wave of the pandemic in Japan is winding down only slowly, and in part because of the intensifying conflict between Russia and Ukraine that began in late February.”

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