• Kyodo

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Japan’s core private sector machinery orders fell 1.5% in June from the previous month — the first decline in four months — but momentum toward recovery from the fallout of the coronavirus pandemic continued, government data showed Wednesday.

The orders, which exclude those for ships and those from electricity utilities due to their volatility, totaled ¥852.4 billion ($7.8 billion), according to the Cabinet Office.

The Cabinet Office maintained its assessment that machinery orders, seen as a leading indicator of corporate capital spending, are showing “signs of picking up.” In May, the office revised upward the evaluation for the first time in five months.

“When we look at the breakdown, orders from both manufacturers and nonmanufacturers kept increasing, and the three-month moving average was also in the plus column. The recovery trend has not changed,” a government official said.

Machinery orders from manufacturers rose 3.6% to ¥403.9 billion, up for the third straight month. Categories such as production machinery as well as information and communication electronics equipment contributed to the increase, with continuing demand for electronic parts and semiconductors.

Orders from nonmanufacturers advanced 3.8% to ¥470.5 billion, rising for the second month in a row, with strong demand from construction as well as wholesale and retail sectors, reflecting increased construction of distribution bases for both e-commerce and traditional shops, the official said.

On a quarterly basis, core orders climbed 4.6% in the April-June period, following a 5.3% drop in the previous three months. The orders are forecast to increase 11.0% in the July-September period.

Manufacturers are expected to boost capital spending related to digitalization and green technology, the official said.

In the reporting month, orders from overseas, seen as an indicator of future exports, dropped 10.0% to ¥1.2 trillion, falling for the first time in three months.

Those from the public sector fell 2.8% to ¥257.6 billion, following a 3.1% rise. Total orders sagged 6.6% to ¥2.6 trillion.

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