Japan Machine Orders Fall 15.7 Percent in December

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.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza