Corporate Japan Capital Expenditure Continues to Fall as Machine Orders Are Lower in June

Japan’s core machinery orders fell in June and companies expect them to fall further in the current quarter, another sign that government stimulus has yet to boost capital spending as debate intensifies over how to address massive and growing public debt.

Weak capital spending is a source of concern for Prime Minister Shinzo Abe, who faces a tough decision on whether or not to go ahead with a sales tax increase to lift revenues and is reportedly now considering a cut in corporate taxes.

The 2.7 percent fall in core orders, which excludes those of ships and electric power utilities, compared with economists’ median forecast of a 7.2 percent drop and followed a 10.5 percent jump in May, data from the Cabinet Office showed.

The machinery orders data, a leading indicator of capital spending, came a day after a slower-than-expected growth figures for the second quarter that showed capital expenditure fell for a sixth straight quarter.

via Reuters

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