Japan: Machinery orders rebound less than expected
August 9, 2012
Machinery orders, a leading indicator of capital spending over a three to six month period, rebounded less than expected in June, reflecting concerns on global economic recovery. Core machinery orders (private sector, excluding volatile orders) expanded a seasonally adjusted 5.6% over the previous month, contrasting the 14.8% fall recorded in May, which had represented the sharpest contraction since October 2001. The print, however, undershot market expectations that had orders rising a robust 11.2%. The non-manufacturing category rebounded in June, while manufacturing orders remained in the red. Moreover, machinery orders from overseas, which determine future exports, deteriorated sharply. Compared to the same month last year, core machinery orders fell 9.9% in June, which contrasted the 1.0% rise observed in May and marked, in fact, the steepest decline since November 2009. As a result, the trend is pointing downwards, with annual average growth in core machinery orders falling from 6.1% in May to 3.4%. Owing to the weak outturn, the Cabinet Office downgraded its assessment on machinery orders, stating that the trend is moving sideways. In addition, the Office predicts a 1.2% drop in the third quarter, following the 4.1% contraction posted in the second.