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 in order to end nearly two 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 came just after a 9.3 percent jump in November, indicating that Japanese companies have not grown wary of boosting their investment.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.