TOKYO–Japan core machinery orders fell in March for a second straight month, indicating firms’ cautious about capital spending amid worries about the global economic slowdown.
Japan’s economyemerged from recession in the first quarter as a post-COVID consumption rebound offset global headwinds. But tame reading in the machinery orders may cast doubts about the pace of the economic recovery.
Core orders, a highly volatile data series regarded as a barometer of capital expenditure in the coming six to nine months, declined 3.9 percent in March from the previous month, Cabinet Office data showed on Monday.
That was weaker than the median forecast of a 0.7 percent advance by economists in a Reuters poll.
Compared with a year earlier, core orders, which exclude volatile numbers from shipping and electric utilities, fell 3.5 percent in March, according to the data. That was also weaker than a 1.4 percent gain of forecast.
Manufacturers surveyed by the Cabinet Office are expecting core orders to rise 4.6 percent in April-June, after a 2.6 percent growth in the previous quarter.
The government kept its view on machinery orders, saying they are “stalling”.
Japan’s economy emerged from recession and grew faster than expected in the first quarter as a post-COVID consumption rebound offset global headwinds, shoring up hopes for a sustained recovery.
But mounting signs of a slowdown in US, European and Chinese growth cloud the outlook for the export-reliant economy, heightening uncertainty on how soon the central bank can phase out its massive stimulus program.
“Consumption will continue to underpin growth as removal of COVID curbs boost tourism and service spending,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.
“But the economic recovery will be moderate as weak overseas demand will weigh on exports. It will be a tug-of-war between robust domestic demand and sluggish exports,” he said.
The world’s third-largest economy grew an annualised 1.6 percent in January-March, government data showed, far exceeding market forecasts for a 0.7 percent gain and marking the first rise in three quarters.
The growth followed a 0.1 percent fall in the final quarter of last year, which was revised down from a 0.1 percent rise. The decline marked two straight quarters of contraction, meeting the definition of a technical recession.
Private consumption, which makes up more than half the economy, grew 0.6 percent in January-March from the previous quarter, as the country’s re-opening from the pandemic boosted service spending. That beat forecasts of a 0.4 percent increase.
Capital expenditure also surprised, expanding 0.9 percent, confounding forecasts for a 0.4 percent fall.
Japan’s nominal gross domestic product (GDP) reached a record 570.1 trillion yen ($4.22 trillion), helped in part by rising prices, economy minister Shigeyuki Goto said.
However, Goto said caution was required amid emerging risks.
“We must meticulously pay heed to the global economy, and impacts from financial markets and rises in interest rates on real economy,” he said.
The strength in domestic demand offset weakness in exports, which slumped 4.2 percent in January-March, marking the first decline in six quarters. -Reuters
