Japan: Machinery orders decelerate in July
September 11, 2012
Machinery orders, a leading indicator of capital spending over a three to six month period, decelerated in July, but still marked a second consecutive monthly rise after the sharp contraction recorded in May. Core machinery orders (private sector, excluding volatile orders) expanded a seasonally adjusted 4.6% over the previous month, following the 5.6% rise seen in June. In addition, the print beat market expectations that had orders rising 2.0%. Non-manufacturing orders fell into the red in July, while the manufacturing category rebounded. Moreover, machinery orders from overseas, which determine future exports, also bounced back. Compared to the same month last year, core machinery orders rose 1.7% in July, contrasting the 9.9% drop observed in June, which had marked the steepest decline since November 2009. However, the trend continued pointing downwards, with annual average growth in core machinery orders falling from 3.4% in June to 3.2%. Against this backdrop, the Cabinet Office maintained 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.