Machinery orders rise in March for second straight month

17 May


Japan’s private-sector core machinery orders gained 1.4 percent in March from the previous month, up for the second consecutive month, helped by solid demand in the manufacturing sector that offset weakness in the nonmanufacturing sector, government data showed Wednesday.

The orders, excluding those for ships and from utilities because of volatility, totaled ¥862.3 billion ($7.60 billion). The figure is widely viewed as an indicator of capital spending by companies.

The Cabinet Office maintained its basic assessment that the recovery in machinery orders has slowed. In February, the core machinery orders were up 1.5 percent.

Orders from the manufacturing sector gained 0.6 percent to ¥352.9 billion, supported by robust demand in the nonferrous metal and for general-purpose and production equipment.

On the other hand, orders from the nonmanufacturing sector slipped 3.9 percent to ¥496.4 billion, following recent gains.

Overseas demand for Japanese machinery, an indicator of future exports, decreased 2.8 percent to ¥846.2 billion.

Despite the second straight monthly gain, the outlook may not be bright, with machinery orders expected to slide 5.9 percent in the current quarter through June.

The outlook indicates that Japanese companies remain reluctant to aggressively boost capital spending at a time when the global economy is expected to grow moderately amid lingering uncertainty over the economic and trade policies of U.S. President Donald Trump.

A 1.1 percent drop is projected for the manufacturing sector, while the nonmanufacturing sector is expected to register a sharper 9.6 percent drop.

“The outlook for the nonmanufacturing sector is bad across the board,” a Cabinet Office official said. The sharp drop is expected as demand from the wholesale and retail as well as finance and insurance sector will likely be weak.

Total orders, including those from the domestic public sector and abroad, were up 1.3 percent to ¥2.24 trillion, rising for the first time in four months.

For fiscal 2016, which ended in March, machinery orders gained 0.5 percent to ¥10.23 trillion, marking the fourth straight year of growth, the Cabinet Office said.

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