Core private-sector machinery orders in Japan shrank a seasonally adjusted 1.1 percent in April from March, marking the fourth consecutive month of decline, the Economic Planning Agency said Thursday.
The EPA, however, retained its assessment from the previous month that the basic trend in machinery orders, which do not include orders for ships or from power companies, is showing a continuous recovery.
Core private-sector machinery orders — totaling 900.4 billion yen in April — are considered indicative of corporate capital spending trends six to nine months ahead. Firms typically start installing ordered machinery within that time frame.
The EPA’s Yoshihiko Senoo downplayed the fact that April marked the first four months of unbroken decline since April 1987, when the agency expanded the survey to cover 280 machinery makers from 178.
Senoo said the month-to-month declines from January to April were relatively small. In the past, even in periods of economic expansion, the volatility of machinery data has caused double-digit declines, Senoo said.
Senoo, chief of the agency’s Business Statistics Research Division, also pointed out that core machinery orders were higher than a year earlier.
The April orders were 13.4 percent higher than a year earlier, marking five consecutive months of gains over the corresponding 1999 figures.
In April, orders increased from general machinery builders, steelmakers, transport firms and real-estate companies. Orders from electrical machinery manufacturers, precision machinery firms, telecommunications carriers, banks and other financial firms dropped off.
The EPA still believes corporate capital spending will bottom out in the first half of fiscal 2000, most likely in the April-June period, Senoo said.
The Ministry of Finance’s capital-spending data released Wednesday confirms this view, according to Senoo.
The ministry said Wednesday that capital spending halted its long slide, growing 3.3 percent from year-earlier levels in the January-March quarter, the first upturn in nine quarters.
Wholesale prices dip
Domestic wholesale prices dropped 0.1 percent in May from the previous month, the first fall since October, the Bank of Japan said Thursday.
The central bank attributed the decline chiefly to lower prices of crude oil, coal products, machinery, as well as nonfood agricultural and forest products.
The temporary fall in crude oil prices in March and April also affected wholesale prices in May, the BOJ said.
Despite the monthly fall, wholesale prices managed to edge up 0.3 percent on the year for the third straight month of rise over year-before levels, the bank said.
The domestic wholesale price index stood at 96.1 in May against a base of 100 for 1995.
Prices of nonferrous metals rose 1.1 percent over April, but prices of petroleum and coal products such as fuel oil fell 2.4 percent.
“It takes about a month for domestic wholesale prices to be affected by international oil price changes,” a BOJ official said, adding that the difficulty in predicting future oil price movements makes it even more difficult to forecast domestic wholesale price changes.
Prices of electrical machinery fell 0.2 percent. Prices of hydraulic pumps and other general machinery edged down 0.1 percent, while those of nonfood farm and forest products dipped 4.7 percent.
Import prices in terms of contract currencies fell 1 percent from the previous month, chiefly due to the fall in prices of crude oil, coal and natural gas, and lumber and other wood products. But they rose 10.4 percent from a year earlier, with an index reading of 95.8.
In yen terms, the import price index registered 104.7, up 1 percent from the previous month and up 0.8 percent from a year earlier, reflecting the depreciation of the Japanese currency.
Export prices in terms of contract currencies dropped 0.3 percent in May from April, but were 1.9 percent higher than a year earlier, with the export price index registering 87.5.
Chemical products and electrical machinery export prices fell against a rise in prices for metals and metal products.
In yen terms, the index stood at 93.4, up 1.3 percent from the previous month because of a weakening of the yen. Yen-denominated export prices, however, fell 7.6 percent from a year before.