Japan: Machinery orders in June contract at fastest pace in over one year
August 13, 2015
Core machinery orders (a leading indicator of capital spending over a three- to six-month period) declined sharply in June, after expanding for three consecutive periods. Headline machinery orders (private sector, excluding volatile orders) declined 7.9% in June over the previous month, in seasonally-adjusted terms, which contrasted the 0.6% increase recorded in May. The result exceeded the 4.8% decrease that market analysts had expected and represented the steepest drop since May 2014.
While overall manufacturing orders declined sharply in June, non-manufacturing books recorded a mild increase in the same month. On the upside, export orders expanded strongly in June, reflecting rising overseas demand for Japanese goods.
Compared to the same month of last year, core machinery orders rose 16.6% in June. The print marked a moderation over the 19.3% increase tallied in the previous month. As a result, the trend continues to point upward, with annual average growth in core machinery orders rising from 2.2% in May to 3.8% in June, which marked a six-month high.
The Cabinet Office maintained its assessment on machinery orders, stating that, “they are picking up.” Businesses surveyed by the Cabinet Office predict that there will be a 2.9% increase in the third quarter, following Q2’s 6.3% expansion.