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Japan core machinery orders rebound in April, but economic outlook remains murky

Japan core machinery orders rebound in April, but economic outlook remains murky

Japanese machinery orders _ a key barometer of capital spending _ rebounded in April after falling for two straight months, but the boost did little to alleviate concerns over the outlook for the world's second-largest economy.
Core machinery orders, which exclude often volatile orders from electric power firms and those for ships, rose 5.5 percent in April from the previous month, the government said Tuesday.
That's after an 8.3 percent drop in March and a 12.3 percent plunge in February.
Compared with a year earlier and without seasonal adjustments, core orders rose 0.5 percent in April, the data from the Cabinet Office showed.
The indicator is considered an important gauge of business investment in the coming months, providing a window into corporate sentiment amid global economic uncertainties and weakening profits. The April bounce, while beating market expectations for a 3 percent increase, looks like a temporary bump than a reversal in the overall decline in machinery orders, economists said.
The Cabinet Office left unchanged its March assessment of the indicator, describing orders as "weakening."
One-time orders for power-generation machinery as well as railroad cars drove up April's numbers, said UBS economist Akira Maekawa.
Without those factors, he said, April core orders would have declined moderately from a year earlier instead of posting a slight gain.
"We're not in a situation where companies are aggressively making capital investments," Maekawa said.
The machinery orders data came a day after the release of a business activity index, which the government said signaled a "possible turning point" in country's economy.
Japanese Economy Minister Hiroko Ota on Tuesday downplayed the data's implications, saying that it was too early to declare the end of Japan's six-year economic expansion.
Still, she acknowledged that soaring crude oil prices and the U.S. economic slowdown are battering the country, and said Japanese capital spending remains weak.
"The orders for April rose higher than expected, but they are just a rebound from a consecutive fall in the two previous months. (The investment situation) needs careful monitoring," she said at a regular press conference Tuesday.
The Cabinet Office predicted last month that machinery orders in the April-June quarter would fall 10.3 percent from the previous quarter and decline 6.6 percent on year.
Ota, however, said she doesn't expect machinery orders to remain stagnant in the future.
"While the U.S. economy is slowing down, the Asian economies remain healthy, which is a plus (for machinery orders)."


Updated : 2021-04-15 08:00 GMT+08:00