–Japan Capex Demand Seen Solid, as Seen in Q2 GDP Growth
–Japan Govt Keeps View: Machine Orders Showing Signs of Pickup
By Max Sato
(MaceNews) – Japanese machinery orders, the key leading indicator of business investment in equipment, rebounded slightly in June, reflecting a cautious sentiment against the backdrop of solid needs to upgrade computer networks, reduce emissions and automate operations amid labor shortages, data released Wednesday by the Cabinet Office showed.
Business investment in equipment rebounded a stronger-than-expected 1.4% on quarter in April-June after slipping 0.3% in January-March, scoring the highest growth since the 3.2% jump in the first quarter of 2020, GDP data released Monday showed.
Japan’s gross domestic product for the April-June quarter posted the third straight quarter-on-quarter growth, up a solid 0.5%, or an annualized 2.2% rise, led by pent-up demand for shopping, dining out and traveling in light of eased public health restrictions, but the outlook for economic growth faces downside risks from a resurgence in Covid cases in Japan and slower global growth.
The key points from machinery orders data:
* Core private-sector machinery orders, which exclude volatile orders from electric utilities and for ships, rose 0.9% from the previous month on a seasonally adjusted basis in June after falling 5.6% in May in reaction to an unexpected 10.8% jump in April. The rebound was smaller than the median economist forecast for a 1.8% rise. Orders from manufacturers marked the first rise in two months while those from non-manufacturers recorded the seconds straight drop.
* The increase was led by higher orders for engines, transport equipment, machine tools and computers. Demand for communications equipment from boilers slipped.
* The Bank of Japan’s quarterly Tankan business survey for June released on July 1 showed that both large and smaller companies revised up their plans for investment in equipment sharply for fiscal 2022 that began on April 1.
* The Cabinet Office maintained its assessment after upgrading for the first time in four months in June for April data, saying, “Machinery orders are showing signs of a pickup.”
* Core orders rose 6.5% from a year earlier in June for the 15th straight rise after rising 7.4% in May. It was slightly softer than the median economist forecast of a 6.7% rise.
* Orders from overseas, which are not part of the core measure, dipped 4.6% on the month in June after falling 2.4% in May and surging 52.1% in April. This category maintained a fast pace of year-on-year increase, up 26.4% in June, after rising 28.3% in May.