Japan: Machinery orders decline at fastest pace in nearly two years in April
June 9, 2016
Core machinery orders (a leading indicator of capital spending over a three- to six-month period) declined at the sharpest pace since November 2014 in April, signaling not only that the Kumamoto earthquakes in April had a remarkable impact on capital expenditure but also that business investment will likely remain weak throughout this year. Headline machinery orders (private sector, excluding volatile orders) fell 11.0% in April over the previous month in seasonally-adjusted terms, which contrasted the 5.5% increase recorded in March. Moreover, the drop exceeded the 2.3% decrease that market analysts had expected.
Overall manufacturing orders dipped into negative territory in April, while the decline in non-manufacturing books contracted at a softer pace. Export orders declined in April following March’s strongest expansion in five months.
Compared to the same month of the previous year, core machinery orders fell 8.2% in April, which contrasted the 3.2% increase tallied in the previous month. As a result of April’s drop, the trend now points downward, with annual average growth in core machinery orders edging down from March’s 4.1% to 3.2%.