Roundup: Japan's core private-sector machinery orders increase in March, declines expected next quarter

Japan's core machinery orders increased 5.5 percent in March from a month earlier on a seasonally adjusted basis, the Cabinet Office said Thursday.

According to the office, machinery orders in the recording period totaled 895.1 billion yen (8.12 billion U.S. dollars), with the orders excluding volatile ones including ships and from utilities. The figure came in above median analysts' and the government's own expectations.

The Cabinet Office stated, "In the April to June period the total amount of machinery orders was forecast to decrease by 1.2 percent and private-sector orders, excluding volatile ones, were forecast to fall by 3.5 percent from the previous quarter respectively."

The government maintained its previous assessment of the orders, however, stating that, "they are showing signs of picking up."

But despite orders for the January to March period rising 6.7 percent on a quarterly basis, the government said it expects a downturn ahead, with orders likely to slump 3.5 percent in the three months through June.

With machinery orders being a key advance indicator for corporate capital spending, with the government using the data to predict the strength of business spending in a six to nine month period ahead with such business investment accounting for roughly 15 percent of Japan's gross domestic product, analysts are eyeing the government and the central bank's reaction to the latest machinery order data and a slew of other macroeconomic figures, to determine if any further monetary easing measures will be taken.

Orders for March from the manufacturing sector rose 19.7 percent to 384.2 billion yen following a 30.6 percent tumble a month earlier, the data showed, and nonmanufacturing industry orders dropped 6.9 percent to 494.4 billion yen, marking the first downturn in four months, the Cabinet Office said.

Meanwhile, overall orders including those from the domestic public sector and those from overseas countries, increased 15.8 percent to 2.6 trillion yen, while foreign demand for Japanese machinery, a gauge of future export demand, leapt 28.5 percent to 933.7 billion yen.

The types of machinery also included in the monthly government survey comprise engines and turbines, heavy electrical machinery, electronic and communication equipment, industrial machinery, machine tools, railway rolling stock, road vehicles, aircraft, ships, water crafts, as well as sub types in the aforementioned categories.

The Cabinet Office's figures Thursday, which come on the heels of orders slumping 9.2 percent a month earlier, were recorded as Japan's March quarter GDP had risen at a better-than-expected 1.7 per cent annualized pace in the first three months of this year.

The government data also showed that the total value of machinery orders received by 280 manufacturers operating in Japan rose by 15.8 percent in March from a month earlier on a seasonally adjusted basis.

In the January to March period, however, the total value of orders decreased by 4.4 percent on a seasonally-adjusted basis, compared with the previous quarter, the Cabinet Office said Thursday, reiterating data showing that further decreases are expected in the coming months, which will weigh on GDP analysts were quoted as saying Thursday.

In fiscal year 2015 the total amount of machinery orders decreased by 0.6 percent, whereas private-sector orders, excluding volatile ones, increased by 4.1 percent to 10.18 trillion yen, marking the third straight year of increases, the office said. Endit