Japan’s June machinery orders post biggest jump on record


Cabinet Office data yesterday showed core orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, rose 13.9% in June from the previous month.

TOKYO: Japan’s core machinery orders unexpectedly rebounded in June to post their largest monthly expansion on record, in a sign corporate investment remains resilient to slowing global growth and international trade frictions.

Cabinet Office data yesterday showed core orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, rose 13.9% in June from the previous month.

That marked the biggest month-on-month gain since comparable data became available in 2005. It also defied a 1.3% drop forecast by economists in a Reuters poll and more than recouped a sharp 7.8% slump in May.

The jump in June orders was partly driven by big-ticket items, but even without them core orders were likely positive, a government official told a briefing. The value of core orders was the highest since August 2018.

Orders from non-ferrous metals industry and transportation equipment makers rose in June, while those from the telecommunications industry fell.

Policymakers are closely watching capital expenditure and hope domestic demand can offset risks to growth from a bruising U.S.-China trade war and slowing global demand. A weeks-long trade dispute between Japan and South Korea has also added to the strains on businesses.

“Manufacturers’ orders such as by high-tech firms contracted quite a lot, ” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.

“Those were offset by increased spending by service-sector firms investing in technology to counter the labour shortage. There was also spending on hotels ahead of the 2020 Tokyo Olympic Games.”

Capital expenditure has been a bright spot in the fragile economy, helping second-quarter gross domestic product expand at an annualised rate of 1.8%, which beat analysts’ projections.

Wednesday’s data offers a measure of relief for the Bank of Japan, which is under pressure to follow other central banks and boost stimulus to fend off the impact from a global slowdown.

However, growing global pressure threatens the outlook for Japan’s export-reliant economy, the world’s third-biggest, with risks to business confidence and investment tilted to the downside.

There are already some signs of domestic weakness as Prime Minister Shinzo Abe’s government prepares to raise the national sales tax to 10% in October. — Reuters


Economy , Japan , machinery , order , biggest jump ,

   

Across The Star Online


Air Pollutant Index

Highest API Readings

    Select State and Location to view the latest API reading

    Source: Department of Environment, Malaysia