–Japan Govt Downgrades View: Pickup in Machine Orders Pausing
–Cabinet Office Official: Demand for Computers Seen on Firm Trend
–Q3 Core Orders Seen Unlikely to Grow 11% Q/Q, As Projected Earlier
By Max Sato
(MaceNews) – Japanese machinery orders, the key leading indicator of business investment in equipment, unexpectedly slumped in August as demand for computers took a breather in a general uptrend, clouding the prospect for a high growth in July-September quarter projected by the government two months ago, data released Wednesday by the Cabinet Office showed.
Orders from manufacturers marked the first drop in five months in August while those from non-manufacturers rebounded after a sharp drop in July.
The key points from machinery orders data:
- Core machinery orders, which exclude volatile orders for power generation equipment and ships, fell a seasonally adjusted 2.4% on month in August, coming in much weaker than the median economist forecast for a 1.7% rise. It followed a 0.9% gain in July, a 1.5% dip in June and a 7.8% surge in May.
- The decrease was led by lower orders from electrical machine makers for computers, general and production machine makers for transport equipment as well weaker orders for computers from both the financial and information service industries.
- “The largest factor behind the decrease was a decline in orders for computers but it seems to be largely in reaction to their recent strength, and we believe the trend for those orders is expected to remain firm,” a Cabinet Office official told Mace News, adding that machinery orders tend to fluctuate from month to month.
- Core orders gained 17.0% from a year earlier in August, the fifth straight year-over-year rise after rising 11.1% in July. It was firmer than the consensus call of a 14.7% gain. The recent double-digit percentage gains are in reaction to a 19.1% slump in the April-June quarter of 2020 and a 14.1% drop in July-September, when the first wave of the pandemic dampened global demand.
- The Cabinet Office revised down its assessment, saying, “The pickup in machinery orders is pausing.” Previously, it had said, “Machinery orders are showing a pickup.”
- The Cabinet Office has projected that core machinery orders will post a 11.0% rise in July-September from the previous quarter following a 4.6% rebound in April-June. In order to hit the 11.0% growth in Q3, core orders in September would have to show a sharp 31.0% increase from August.
Contact this reporter: max@macenews.com
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