–Japan Govt Keeps View: Pickup in Machine Orders Pausing
–Q3 Core Orders Far Below Official Forecast; Q4 Seen Up Moderately
By Max Sato
(MaceNews) – Japanese machinery orders, the key leading indicator of business investment in equipment, were unchanged in September, coming in weaker than a rebound forecast by many and following a surprise slip in August, as global supply chain constraints continued throwing a wrench into production and shipment plans, data released Wednesday by the Cabinet Office showed.
Core orders marked a second straight quarterly gain in July-September but failed to hit a high growth pace projected by the Cabinet Office in August. The outlook for October-December is for a modest increase.
The key points from machinery orders data:
* Core machinery orders, which exclude volatile orders for power generation equipment and ships, were unchanged (-0.0%) on month in September on a seasonally adjusted basis, coming in much weaker than the median economist forecast for a 1.8% rise. It followed a 2.4% drop in August, a 0.9% gain in July, a 1.5% dip in June and a 7.8% surge in May.
* Orders for computers from information service providers picked up after a drop in the previous month and demand for chemical machines from chemical firms and other producers was solid. Those gains were offset by declines in orders for computers from electric machinery and telecom equipment producers as well as from wholesalers and retailers.
* Orders from manufacturers marked the first rise in two months in September while those from non-manufacturers recorded the first drop in two months.
* In the July-September quarter, the core reading rose 0.7% (far below the official forecast of a 11.0% rise) from April-June, when it gained 4.6%. It is projected by the Cabinet Office to rise 3.1% on quarter in October-December, which would be a third consecutive quarterly increase.
* Core orders gained 12.5% from a year earlier in September, the sixth straight year-over-year rise after rising 17.0% in August. It was softer than the consensus call of a 17.4% gain. The recent double-digit percentage jump on year since May has been 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 maintained its assessment after downgrading it last month, saying, “The pickup in machinery orders is pausing.” Previously, it had said, “Machinery orders are showing a pickup.”
* Orders from overseas, which are not part of the core measure, dipped 14.2% on the month in September after slumping 14.7% in August, rising 24.1% July and slipping 10.0% in June. From a year earlier, this category recorded the sixth straight year-on-year rise, up 41.2%, after climbing 49.6% the previous month. The results are in line with slower Japanese export data.