— Japan Govt Upgrades View: Machine Orders Seen Picking Up
— Japan Apr Core Machinery Orders +9.4% Y/Y Vs Mar +1.2%
— Japan Apr Core Machinery Orders Post 2nd Y/Y Rise In Row
TOKYO (MNI) – Japan’s core private-sector machinery orders
continued to rise sharply, up by a seasonally adjusted 4.0% in April
from the previous month, posting the second straight m/m rise after
soaring 5.4% in March, the Cabinet Office said on Wednesday.
The April core figure came in stronger than the consensus forecast
of a 0.7% m/m gain.
From a year earlier, core private machinery orders jumped 9.4% in
April after +1.2% in March, which had been the first y/y gain in 21
months. They have recovered from the record 39.5% plunge marked in
January 2009.
The Cabinet Office upgraded its assessment of machinery orders for
the second month in a row, saying, “there are signs of a pick up.”
Last month it revised up its view, saying core orders “have stopped
falling.” Previously, it had said that “the downtrend is coming to an
end.”
Core private-sector machinery orders, which exclude volatile demand
from electric utilities and for ships, are viewed as a leading indicator
of corporate capital spending.
In April, the core orders in the private manufacturing sector
slumped by 5.5% from the previous month to Y296.3 billion after rising
2.7% in March. It was the first month-on-month drop in five months.
The decrease in the sector was led by weaker orders from shipyards,
steel mills, information and communications electronic equipment makers
and metal product makers among others.
But the drop in core manufacturing orders was more than offset by a
rise core orders for the non-manufacturing sector excluding shipping
lines and power firms, which rose 5.3% to Y464.0 billion, posting the
second straight m/m rise surging 11.1% in March.
The rise in non-manufacturing demand was led by orders for
real-estate and information services, offsetting drops in
telecommunications and as well as finance and insurance, both of which
had shown gains in the previous month.
In February 2010, core orders for the non-manufacturing sector fell
to a recent low of Y393.5 billion, close to the lowest level of orders
from non-manufacturers at Y369.0 billion recorded in May 1987.
The total non-manufacturing sector, including shipping lines and
power firms, rose 4.2% m/m, the third straight monthly rise, after
gaining 1.9% in March.
The key to a rise in total core domestic private-sector orders is a
recovery of demand from non-manufacturers, including telecom carriers
and transportation firms, because the total amount of orders for
non-manufacturers is much higher than that for manufacturers.
The telecommunications industry has been hit by stiff price
competition among mobile carriers but posted two straight monthly gains
through March before falling in April.
Orders from finance and insurance, whose capital expenditure for
merging computer network systems has run its course, had also shown
signs of a pickup, up two months in a row through March.
Outside the core domestic private sector, machinery orders from
overseas posted the first m/m drop in five months, down 3.7% in April at
Y740.5 billion after rising 3.9% in March.
tokyo@marketnews.com
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