Japan’s core machinery orders in June increased by 2.1% from the previous month, according to the Cabinet Office. These private-sector orders, excluding those for ships and power equipment, are considered a key indicator of corporate capital spending and reached ¥876.1 billion.
This growth in core orders exceeded expectations, as a Jiji Press poll of 17 economic research institutes had predicted a rise of only 0.9%. However, despite this positive development, the Cabinet Office maintained its assessment that machinery orders are still at a standstill.
Breaking down the data further, core machinery orders from manufacturers decreased by 0.3% to ¥422.4 billion due to lower demand for semiconductor production equipment. On the other hand, nonmanufacturers saw an increase of 2.4% to ¥450.4 billion driven by strong orders for transportation machinery from the wholesale and retail sector.
Overall machinery orders, including those from the public sector and overseas sources, experienced a decline of 6.0% to ¥3,053.1 billion.
Looking at the second quarter as a whole (April-June), core machinery orders slightly decreased by 0.1% compared to the previous quarter amounting to ¥2,620.2 billion.The decrease was attributed to weak demand for communications equipment used in mobile phone base stations.
However,the Cabinet Office projects that these figures will rebound with an estimated increase of 0.2% in July-September.
Takeshi Minami from Norinchukin Research Institute Co., predicts that there will be an uptick in willingness for capital investment among companies related to domestic demand.