Japan’s core private-sector machinery orders drop for 2nd straight month in February

According to the Cabinet Office, orders in the recording month dropped 9.8 percent from the previous month, with the total orders, excluding those for ships and utilities because of their volatility, coming to 811.4 billion yen. The Cabinet Office lowered its assessment of the orders for the first time in six months, saying the “recovery trend is showing signs of…

TOKYO, April 13 (Xinhua) — Core private-sector machinery orders in Japan fell in February from the previous month, the government said in a report on Wednesday.

According to the Cabinet Office, orders in the recording month dropped 9.8 percent from the previous month, with the total orders, excluding those for ships and utilities because of their volatility, coming to 811.4 billion yen (6.5 billion U.S. dollars).

The latest reading follows a 2 percent retreat logged the previous month, the Cabinet Office’s data showed.

The Cabinet Office lowered its assessment of the orders for the first time in six months, saying the “recovery trend is showing signs of stalling” after orders declined for a second straight month.

It had previously said orders were “picking up” in January.

The office said that weak demand from non-manufacturers in the reporting period dragged down the overall figure, with an official saying the situation in Ukraine and the ongoing COVID-19 crisis here would need to be very closely monitored as these could impact future orders and the economy as a whole.

The Cabinet Office said that machinery orders from the manufacturing sector slumped 1.8 percent to 424.5 billion yen in the recording period, marking the second successive month of decline.

Orders from non-manufacturers dropped 14.4 percent to 387.8 billion yen, led by businesses in information services, finance and insurance as well as transport and postal services, the office said.

Orders from overseas, meanwhile, seen as an indicator of future exports, dropped 2.8 percent to 1.27 trillion yen, dragged down by falling demand for electronic and communication machines and railway cars, the office said.

The latest figures also showed that orders from the public sector declined 5.3 percent to 221.5 billion yen.

In February, the office said that total orders fell 10.6 percent to 2.46 trillion yen, with the latest figure coming on the heels of a 3.3 percent drop logged a month earlier.

Machinery orders are a key advance indicator for corporate capital spending and the government uses the data to predict the strength of business spending in a six to nine month period ahead.

A rise in capital expenditure can boost the economy as it means Japanese companies are producing more machinery to meet growing demands from overseas markets.

A drop in capital expenditure, as was the case in February, has the opposite effect with machinery makers’ output negatively impacted by falling demand.

Such business investment accounts for roughly 15 percent of Japan’s gross domestic product.

The types of machinery included in the monthly government survey comprise engines and turbines, heavy electrical machinery, electronic and communication equipment, industrial machinery, machine tools, railway rolling stock, road vehicles, aircraft, ships, watercraft, as well as subtypes in those categories. (1 U.S. dollar equals 125.67 Japanese Yen) Enditem

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