Japanese machinery orders fell to a record low in July of 665bn yen ($7.2bn) in July, according to data released on Thursday. The 9.3 per cent decline was more than twice the 3.5 per cent drop forecast by economists.
As Bloomberg reported:
Sept. 10 (Bloomberg) — Japanese machinery orders fell to a record low in July, signaling companies burdened with idle factories are wary that a rebound in global demand will last. Orders, an indicator of capital spending in the next three to six months, plunged 9.3 percent from June to 665 billion yen ($7.2 billion), the lowest level since the survey began in 1987, the Cabinet Office said today in Tokyo. The decline was more the twice the 3.5 percent drop forecast by economists.
What’s really interesting though, as Barcap’s Kyohei Morita points out , is the fact that much of the weakness came from non-ferrous metal orders. These fell sharply after surging in the previous month. Orders were also weighed down by steep drops in “other transport machinery” and general machinery. But as the analyst also noted, that doesn’t necessarily break the improving trend :
Even so, there was a “payback” dimension to the latest figures and we maintain our view that machinery orders are heading toward firmer ground. In this light, we believe GDP-based capital investment will start to increase in Oct-Dec. However, a more full-scale recovery in capital investment will likely take until the second half of 2010.
And as we would note, orders tend to be extremely volatile anyway:
Related links:
The ups and downs of Japan’s first post – LDP week
The yen, Greed & Fear and the Britney factor - FT Alphaville