Machine tool orders fell in April to their lowest level in more than a decade, preliminary data showed Thursday, in a sign the coronavirus pandemic is taking a deeper toll on the nation’s economy.
The data is the latest in a string of grim releases that are reinforcing views the world’s third-largest economy is sliding into a deep recession.
In April, machine tool orders slumped 48.3 percent compared with a year earlier, a preliminary estimate from the Japan Machine Tool Builders’ Association (JMTBA) showed.
Total orders, regarded as a leading indicator on spending on factory equipment, hit their lowest level since January 2010, a JMTBA spokesman said.
They were dragged down in particular by domestic demand, which fell 51.4 percent from a year earlier to its lowest level in more than seven years.
Compared with a month earlier, orders dropped 27.5 percent.
“Of course, there was a big decline, and it confirmed that companies are foregoing capital expenditure,” said Atsushi Takeda, chief economist at Itochu Economic Research Institute.
But Takeda added that orders not having collapsed even more sharply showed the nation’s factories remained active despite the nationwide state of emergency declared a month ago.
“It shows the lockdown didn’t stop economic activity as a whole in Japan, but (that its impact) is centered on the services sector,” Takeda said.
The nation’s economy likely shrank for a second straight quarter in the first three months of this year, a Reuters poll has shown, meeting the technical definition of a recession. Many analysts believe it will contract at an even sharper rate in the current quarter.