Core machinery orders beat expectations in April

Kyodo

Core private-sector machinery orders rose a seasonally adjusted 5.7 percent in April from the previous month, beating market expectations on the back of strength in the chemical and retail sectors, the government said Wednesday.

The core orders, which exclude those for ships and from electric utilities that are seen as volatile, were valued at ¥788.6 billion, the highest since October 2008, the Cabinet Office said.

It was the third increase in four months and came after a 2.8 percent drop the previous month when orders fell chiefly due to a one-off factor, officials said.

The Cabinet Office maintained its basic assessment of machinery orders, a leading indicator for capital spending by companies, saying they have been on a “trend of moderate increase.”

Orders from manufacturers grew 3.4 percent to ¥328.2 billion while those from nonmanufacturers went up 5.7 percent to ¥441.8 billion.

By industry, hefty orders from the chemical sector led the advance of manufacturers. Those from oil and coal as well as information and communications firms also contributed to the growth.

Meanwhile, orders from carmakers fell 20.0 percent. A Cabinet Office official said the impact of moves by carmakers to boost production to make up for losses caused by the massive flooding in Thailand last fall appears to be fading.

In the nonmanufacturing sector, orders from the retail and wholesale industries shot up 41.1 percent, reflecting the opening of new convenience stores and other outlets. Agriculture, forestry and fisheries industries also helped the nonmanufacturing sector mark its first growth in two months.

Meanwhile, orders from the public sector slid 5.0 percent to ¥287.7 billion, in a turnaround from the 40 percent growth the previous month. Demand growth for machinery from outside the country was also marginal, with overseas orders rising 0.3 percent to ¥787.6 billion.