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Japan machinery orders fall by the most in 6 months, business spending hit

by Daniel Leussink and Tetsushi Kajimoto

TOKYO (Reuters) – Japan’s machinery orders hit their largest in six months in August amid pressure from a slowing global economy and a weaker yen The one-month drop has pushed up import costs and dimmed the outlook for business spending.

Business confidence at big manufacturers fell to a five-month low amid a double whammy of inflation and a global slowdown, Reuters Tankan surveys showed, respectively. Growth hurt the trade-reliant economy.

Core orders, a highly volatile data series seen as a barometer of capital spending in the next six to nine months, fell 5.8% month-on-month in August, Cabinet Office data showed.

This was the biggest month-on-month drop since a 9.8% drop in February, below the median forecast of a 2.3% drop by economists in a Reuters poll.

“Although ‘core’ machinery orders fell sharply in August as non-manufacturing orders slumped, the third-quarter average still points to expanding non-residential investment growth,” Capital Economics Japan Scientist Darren Tay said.

“The key is that average machinery orders in Q3 are 1% stronger so far than Q2”.

By industry, non-manufacturer orders fell 21.4%, pulling down the overall figure. This was largely due to the transport and postal sub-sector reversing last month’s gains, the data showed.

Increased orders from manufacturers 10. 2%, boosted by large orders for nuclear motors in the non-ferrous metals sub-sector.

Survey points to slowing global growth. Overseas orders fell 18.9%, the largest drop since March 2021, the fourth consecutive month of decline, highlighting growing concerns about the external environment.

“Capital goods manufacturers have so far benefited from overseas demand, but the momentum is waning due to the impact of the overseas economic slowdown,” said Takeshi Minami, chief economist at Agriculture, Forestry, and China Gold Research Institute. .

“If the overseas slowdown becomes a real problem, companies may cancel their capital expenditure plans,” he said, highlighting risks to the outlook despite the fact that the first six months of the current fiscal year The firm’s Spending

data found that core orders, which exclude volatility data from shipping and power utilities, rose 9.7% in August compared to a year earlier.

In a Reuters Tankan survey, business confidence was hurt as global monetary tightening and the yen’s recent fall to a 24 year low against the dollar.

The world’s third-largest economy has managed to expand at a relatively strong pace so far this year, as the government lifts local COVID-19-19 Private spending picked up after curbs, growing at an annualized rate of 3.5% in the second quarter.

But it faces the risk of a slowdown in Asia and the United States, clouding prospects for a strong recovery and making domestic businesses and consumers more cautious.



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