Japan: Machinery orders decline again in May
July 11, 2016
Core machinery orders (a leading indicator of capital spending over a three- to six-month period) declined for the second consecutive month in May, signaling that the strengthening of the yen is not boding well for capital expenditure. Headline machinery orders (private sector, excluding volatile orders) fell 1.4% in May over the previous month in seasonally-adjusted terms, which followed the 11.0% decrease recorded in April. That said, the drop was above the 3.2% decrease that market analysts had expected.
Both overall manufacturing orders and non-manufacturing books contracted in May, albeit at a softer pace than April’s decrease. Export orders declined in May at the fastest rate in four months.
Compared to the same month of the previous year, core machinery orders fell 11.7% in May. The print followed the 8.2% decrease tallied in the previous month and marked an 18-month low. As a result of May’s drop, the trend deteriorated further, with annual average growth in core machinery orders falling down from April’s 3.2% to 1.0%.