–Core Orders Post 2nd Straight Y/Y Rise After Marking 1st Rise in 13 Months in March
–Cabinet Office Keeps View Ater Last Month’s Upgrade: Machine Orders Showing Signs of Pickup
By Max Sato
(MaceNews) – Japanese core machinery orders, the key leading indicator of business investment in equipment, posted their first drop in three months in April with a 2.9% fall on a pullback in manufacturing and taking a breather after stronger-than-expected gains of 2.9% in March and 7.7% in February, data released Monday by the Cabinet Office showed.
The latest figure was largely in line with the median economist forecast of a 2.8% decrease (forecasts ranged from a 7.2% drop to a 0.8% rise). Despite the drop in April, the three-month moving average of core orders rose 2.4% in the February-April period after rising 3.0% in January-March.
The Cabinet Office maintained its assessment after upgrading it last month for the first time since its April 2022 report, saying, “Machinery orders are showing signs of a pickup.” Previously, it said orders had “weakened.”
Orders from manufacturers slumped 11.3% on the month, hit by declines in engines from shipyards and computers from electric equipment makers, after a 19.4% surge in March. Those from non-manufacturers rebounded 5.9% after posting the first drop in three months with a 11.3% slump in March, led by higher demand for computers from the financial industry and for buses and trucks from transporters. Orders for computers have been strong but mixed, with those from the wholesale/retail industry and leasing firms down in April.
Core machinery orders, which track the private sector and exclude volatile orders from electric utilities and for ships, marked the second straight year-over-year increase, up 0.7%, after rising 2.7% in March for the first rise in 13 months. It was firmer than the consensus forecast of being unchanged.
Last month, the Cabinet Office forecast that core orders were likely to slip back 1.6% in the April-June quarter for the first drop in two quarters, which are expected to be pulled down by both the manufacturing and non-manufacturing sectors in payback for recent gains.
Core orders fell to ¥886.3 billion on a seasonally adjusted basis in April after surging to ¥913.0 billion in March, which was the largest since ¥920.1 billion in January 2023. Companies have solid capex plans for fiscal 2024 that began on April 1, backed by strong demand for automation amid labor shortages as well as government-led digitization and emission control.