Japan's core machinery orders plunge 15.7% on month in December
Baku, February 15 (AZERTAC). Japan's core private-sector machinery orders fell at their fastest pace in December, down a seasonally adjusted 15.7 percent on month, the government said Wednesday, casting a dark shadow on business investment, a pillar of its economic growth-oriented policy.
The orders, which exclude those for ships as well as those from utilities because of their volatility, shrank for the first time in three months to 744.1 billion yen, the Cabinet Office said, dropping much quicker than market expectations.
It was the sharpest month-on-month decline in the orders, regarded as a leading indicator of capital spending, since comparable data became available in April 2005, though Prime Minister Shinzo Abe's administration has made efforts to bolster business investment to eradicate more than decades of deflation.
December's results may raise concern that capital spending would deteriorate, which could pose a threat to the broader economy that is expected to languish against a backdrop of the planned 3-percentage-point sales tax hike to 8 percent in April.
A Cabinet Office official, however, said the 15.7 percent plunge just came after a 9.3 percent jump in November, indicating that Japanese companies have not grown wary of boosting their investment.
The government therefore left its basic assessment unchanged, saying the orders are "on a growth trend," but it added they "significantly decreased in December."
During the same month, orders from the manufacturing sectors plummeted 17.3 percent to 292.6 billion yen, while those from nonmanufacturers fell 17.2 percent to 455.7 billion yen.
By industry, orders from the electrical machine sector and the pulp and paper industry were lackluster among manufacturers, and those from the finance and insurance sector were also tepid among nonmanufacturers.
Overseas demand for overall Japanese machinery, an indicator of future exports, rose 8.6 percent to 841.7 billion yen, following a 12.2 percent dive in November and a 16.0 percent slide in October.
In 2013, core orders increased 5.8 percent from 2012 to 9.32 trillion yen, with manufacturers climbing 0.7 percent and nonmanufacturers gaining 9.7 percent.
Looking ahead, the Cabinet Office estimated core orders would drop 2.9 percent in the three months through March, from the 1.5 percent expansion in the previous quarter.
The machinery order data covered orders received by 280 selected makers.
