Japan: Core machinery orders growth eases 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—rose 0.6% month-on-month in seasonally-adjusted terms in April, slowing from the 3.7% rise recorded in March.
On an annual basis, machinery orders grew 6.5% in April, rebounding from March’s 2.0% fall. Accordingly, the trend improved, with the annual average variation of machinery orders coming in at minus 6.9% in April, up from March’s minus 8.8% reading.
Regarding the outlook for capital spending, economists at Nomura commented:
“We think real capex on a GDP basis will remain low through Apr–Jun, and we do not expect a full-scale recovery until the second half of 2021, after the rollout of vaccinations in Japan has gotten well under way. With that said, the recent pace of vaccinations in Japan has exceeded our expectations somewhat. If this were to remain the case, economic activity could pick back up earlier, and we see a possibility that overall capex could surpass our forecasts to some extent, mainly in capex from nonmanufacturers.”