Japan’s Falling Machinery Orders Raises Doubts about Business Spending
Japan’s machinery orders fell for a third straight month in September, raising doubts that business spending will be strong enough to offset external pressures, which have clouded the outlook for the export-reliant economy.
Capital spending has been a bright spot for the world’s third-largest economy, driven by refurbishing of aged infrastructure, urban development, automation and investments to cope with a labour crunch in the rapidly ageing population.
Policymakers are counting on solid capital expenditure and domestic demand to prop up growth amid the U.S.-China trade war, a broader global slowdown and the impact from last month’s sales tax hike.
The core machinery orders data, which exclude those from shipbuilders and power utilities, is a highly volatile series but regarded as a key indicator of capital spending.
By sector, manufacturers’ orders dropped 5.2%, dragged down by non-ferrous metals and transport machinery, while the service sector grew 2.6%, led by information and communications.
Manufacturers surveyed by the Cabinet Office forecast that core orders will rise 3.5% in October-December, after a 3.5% decrease in the previous quarter.
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