Create a free Manufacturing.net account to continue

Japan's June Machinery Orders Down

Japanese private-sector's core machinery orders fell a seasonally-adjusted 10.4 percent from May to June.

TOKYO (Kyodo) - Core Japanese private-sector machinery orders fell a seasonally adjusted 10.4 percent in June from the previous month to 960.2 billion yen (US$8.2 billion), but the government kept its basic assessment unchanged, the Cabinet Office said Wednesday.
 
The drop, the first in three months, was much larger than the average market forecast of a 1.4 percent decrease on month. Declines in demand for items such as semiconductor-manufacturing devices from electrical machinery makers contributed to the fall, an official at the office said.
 
The value of the orders was also the lowest since May 2005.
 
Compared with a year earlier, the value fell by an unadjusted 17.9 percent.
 
Despite the lackluster outcome, the government maintained its view on core machinery orders—considered a leading indicator of corporate capital spending six to nine months ahead—as ''seesawing,'' the official said.
 
''Core machinery orders fell after two months of growth in April and May and are expected to rise again in the upcoming July-September period,'' he said.
 
The government had upgraded the assessment from ''recently weakening'' on machinery orders for the first time in 11 month when they grew 5.9 percent in May from the previous month for the second straight monthly increase.
 
Core orders exclude those for ships and orders from electric power companies as they tend to vary widely due to their large size.
 
Taking the June outcome into account, the office said core machinery orders dropped a seasonally adjusted 2.4 percent in the April-June quarter over the previous three-month period.
 
In the upcoming July-September period, however, the office said the core orders are expected to rise 3.7 percent on quarter.
 
The official downplayed the year-on-year fall of 17.9 percent in the reporting month, saying the decline came due to exceptionally high growth in June 2006.
 
Some economists, however, said the June data suggest a slowdown in corporate investment that may hamper economic growth in the near future.
 
''Recent data show machinery orders are still in an adjustment phase, and the trend is expected to continue for a while,'' said Susumu Kato, chief economist at the Tokyo branch of Calyon Capital Investments Asia.
 
Kato said the government assessment is rather ''optimistic,'' adding the latest data may discourage the Bank of Japan from hiking interest rates in the near-term.
 
In the reporting month, orders placed by manufacturers fell 11.4 percent from the previous month to 441.9 billion yen (US$3.8 billion), after jumping 15.3 percent in May.
 
Orders for electric machinery fell 29.0 percent and those for machine tools plunged 57.5 percent. But orders for general machinery rose 8.9 percent and steel industry-related machinery increased 34.5 percent.
 
Core orders from non-manufacturers went down 6.5 percent to 533.9 billion yen (US$4.5 billion) following a 1.8 percent decline in May.
 
Orders from the transportation sector dropped 29.2 percent and those from the finance and insurance sector plunged 21.3 percent, while orders from the construction industry gained 0.5 percent.
 
Demand from overseas dropped a seasonally adjusted 5.9 percent to 1,101.2 billion yen (US$9.4 billion) in June from the previous month. It posted a record high 3,380.4 billion yen (US$28.7 billion) in April-June period, rising 5.7 percent from the previous quarter.
 
Orders from the public sector rose a seasonally adjusted 21.7 percent from the previous month to 352.7 billion yen (US$3.0 billion).
More in Supply Chain