Dec. core machinery orders down 11.9%

February 15, 2018

Tokyo- Japan's seasonally adjusted core machinery orders in December fell 11.9 pct from the previous month, down for the first time in three months, the Cabinet Office said Thursday.

The drop was the biggest since the 15.3 percent plunge in May 2014.

The result was far weaker than the average estimate of a 1.8 percent fall among 20 think tanks polled by Jiji Press. Their estimates ranged from a decline of 5.1 percent to a rise of 4.8 percent.

Core orders, or private-sector orders excluding those for ships and power equipment, closely watched as a leading indicator of corporate capital spending, stood at 792.6 billion yen in December.

While there were relatively large-scale orders from both the manufacturing and nonmanufacturing sectors in November, no such orders came in December, a Cabinet Office official said, explaining the reason for the fallback in the latest reporting month.

Orders from manufacturers fell 13.3 percent to 364.8 billion yen, down for two months in a row. Orders from non-manufacturers, excluding those for ships and power equipment, were down 7.3 percent at 445.7 billion yen, logging the first fall in three months.

Core machinery orders in October-December shrank 0.1 percent from the previous quarter to 2,542.7 billion yen.

As the drop in the final quarter of 2017 was smaller than the Cabinet Office's forecast of a 3.5 percent decline, the government agency kept its assessment unchanged, saying that machinery orders are showing signs of pickup, although it additionally noted that orders in December fell sharply.

In the current January-March period, core orders are projected to increase 0.6 percent. "With order backlogs remaining high, we'll keep close attention on the future course of machinery orders," the official said.

For the whole of 2017, core machinery orders fell 1.1 percent to 10,143.1 billion yen, down for the first time in five years, due to sluggish demand from non-manufacturers. Jiji Press