–Japan Govt Keeps View: Pickup in Machine Orders Stalling
By Max Sato
(MaceNews) – Japanese machinery orders, the key leading indicator of business investment in equipment, rebounded sharply in March after plunging in February, but they fell at a faster pace than officially projected in the first quarter of 2022 and a further decline is expected in April-June amid lingering uncertainty over global demand and surging producer costs, data released Thursday by the Cabinet Office showed.
In the January-March GDP data released Wednesday, capital investment rose 0.5% on quarter, adding 0.1 percentage point to the gross domestic product, which contracted 0.2% on quarter, or at an annualized pace 1.0%, as a surge in imports pushed down net exports and Covid restrictions dampened consumer spending.
The key points from machinery orders data:
- Core private-sector machinery orders, which exclude volatile orders from electric utilities and for ships, jumped 7.1% on the month on a seasonally adjusted basis after slumping at a faster-than-expected pace of 9.8% in February, sliding 2.0% in January and rising 3.1% in December. It was much stronger than the median economist forecast for a 3.7% rise. Orders from both manufacturers and non-manufacturers marked the first rise in two months.
- The increase was led by higher orders for nuclear power generation facilities from non-ferrous metal producers, chemical machines and computers from chemical firms, as well as orders for computers and boilers/turbines from leasing firms and for transport equipment from mining companies.
- In the January-March quarter, core orders dropped 3.6% on quarter for the first drop in four quarters following a 5.1% rise in October-December. The Cabinet Office had projected that core machinery orders would slip 0.5% on quarter in the first three months of 2022. It expects core orders to fall further by 8.1% in April-June.
- The Cabinet Office maintained its assessment, saying, “The pickup in machinery orders is stalling.” Last month, it downgraded its view from the previous statement that machinery orders were “picking up.”
- Core orders still gained 7.6% from a year earlier in March for the 12th straight rise, following increases of 4.3% in February, 5.1% in both January and December and 11.6% in November. The recent double-digit percentage gains were in payback for a 19.1% slump in the April-June quarter of 2020 and a 14.1% drop in July-September that year, when the initial stage of the pandemic dampened global demand.
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Contact this reporter: max@macenews.com
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