Japan's March machinery orders fall as damage from pandemic spreads

By Daniel Leussink TOKYO (Reuters) - Japan's core machinery orders slipped in March, suggesting a widening hit to the economy from the coronavirus although the pace of decline was offset by a large number of orders for big-ticket items. Core machinery orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, edged down 0.4% in March from the previous month, Cabinet Office data showed on Wednesday

Reuters May 20, 2020 07:05:33 IST
Japan's March machinery orders fall as damage from pandemic spreads

Japans March machinery orders fall as damage from pandemic spreads

By Daniel Leussink

TOKYO (Reuters) - Japan's core machinery orders slipped in March, suggesting a widening hit to the economy from the coronavirus although the pace of decline was offset by a large number of orders for big-ticket items.

Core machinery orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, edged down 0.4% in March from the previous month, Cabinet Office data showed on Wednesday.

The drop followed a 2.3% gain in February and was better than a 7.1% decline predicted by economists in a Reuters poll.

"The small decline in orders in March is likely to give way to a collapse in investment across this quarter," said Tom Learmouth, Japan economist at Capital Economics.

"The ominous plunge in domestic machine tool orders in April suggests 'core' machinery orders fell sharply last month," he wrote in a note.

Japan's tool machinery orders in April fell to their lowest level in more than a decade, preliminary data showed last week.

The world's third-largest economy slipped into a deepening recession in the last quarter, underlining the broadening impact from the pandemic which has hit trade-reliant nations such as Japan particularly hard.

The sluggish machinery orders data came after the Reuters Tankan survey on Wednesday showed the slump in Japanese business confidence deepened to a more than decade low in May as firms braced for a growing hit from the virus.

Prime Minister Shinzo Abe has pledged a second supplementary budget later this month, on top of the recently announced record $1.1 trillion stimulus package, to help business and households get through the period of economic weakness.

By sector, manufacturers' orders dropped 8.2%, weighed by pulp and paper products and cars and car parts, while core orders from the service-sector rose 5.3%, led by an 82% jump in orders from the transportation and postal sub-sector.

The March reading was largely driven by a higher than usual number of orders for big-ticket items, including four for the service-sector.

The Bank of Japan will hold an emergency policy meeting on Friday to set up a reward scheme for financial institutions that boost lending to small firms hit by the pandemic.

The central bank in April boosted the amount of corporate bonds and commercial paper it can buy to ease corporate funding strains. It also pledged to buy an unlimited amount of bonds to keep borrowing costs low.

From a year earlier, core machinery orders were down 0.7% in March, beating an expected 9.5% decline and following a 2.4% fall in February.

(Reporting by Daniel Leussink; Editing by Sam Holmes)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.