TOKYO : Japan’s core machinery orders fell in April for the first time in three months, Cabinet Office data showed on Monday, casting some doubt about the strength of capital spending, which is key to a durable economic recovery.
The data followed the Bank of Japan’s (BOJ) decision last week to start trimming its huge bond purchases, with it due to announce a detailed plan next month on reducing its nearly $5 trillion balance sheet.
Core orders fell 2.9 per cent month-on-month in April, versus a 3.1 per cent decline expected by economists in a Reuters poll, the first drop in three months. It is a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months.
The Cabinet Office left its assessment of machinery orders showing signs of picking up unchanged.
Japanese firms tend to compile big spending plans to boost factories and equipment but are often slow to implement them due to uncertainty over the economic outlook.
The weakening of the yen has not helped domestic capital investment much because of Japanese firms’ tendency to invest directly overseas where demand is stronger.
By sector, core orders from manufacturers tumbled 11.3 per cent month-on-month in April, while those from non-manufacturers increased by 5.9 per cent in the same period.
In March, there had been a 19.4 per cent gain by manufacturers and a 11.3 per cent decline by non-manufacturers from the prior month.
Compared with a year earlier, core orders increased by 0.7 per cent in April.