Japan's expansion of core machinery orders shrank sharply in May

Data released by the Ministry of Finance of Japan (Monday) on Monday (July 9) showed that Japan's core mechanical order expansion rate shrank sharply in May. The implied concern over the European debt crisis and global growth slowdown is hampering Japan’s economic recovery.

Specific data shows that in May, Japan’s core machinery orders declined by 14.8% on the month, and the previous value increased by 5.7%; the annual rate rose by 1.0%, and the previous value increased by 6.6%.

The Cabinet Office of Japan stated after the release of the data that the monthly rate for the core machinery in May fell by 14.8%, which was the largest drop in the history of this data in April 2005.

SumitomoMitsuiAssetManagement senior analyst HiroakiMuto in Tokyo, Japan, said that "both the manufacturer's and non-manufacturer's machinery orders have dropped sharply. External demand appears to be weak. Many companies began to be cautious about overseas economies. The global economy is weaker than our previous ones." expected."

The analyst believes that the machinery orders indicate that capital expenditures are weaker than the company's recent BOJ Tankan survey shows; this indicates that the capital expenditure plan in the Tankan report may be lowered. Imports of LNG hit Japan’s current account surplus. Prices of these imported products should begin to follow the lower oil prices.

The analyst also pointed out that the Japanese economy is increasingly worrying. The Bank of Japan appears to be holding its feet this week, but given the weak US economic data and the Chinese central bank and the European Central Bank taking monetary easing measures, the current chance of the Bank of Japan taking a easing measure this week is 50%.

Kazuo Yamamoto, senior economist at Mizuho General Research Institute, said, “If you look at the May data alone, you might say that machinery orders are weak, but because of the volatility of this data, you cannot say that capital expenditure is losing momentum. Capital expenditures are still moderately upward, as the Bank of Japan’s Tankan data showed in June, but the upward trend is moderate and the level of spending is not as high as before the Lehman crisis.”

Yamamoto Kangxi pointed out that public spending and personal consumption are driving the Japanese economy, but the pace of economic growth has slowed after the summer, partly because the government has used up subsidies for low-energy vehicles. In addition, given the uncertainties of Europe and the global economy, it is also impossible to expect too much from exports. In view of the current trend of the yen, the Bank of Japan may not move this week, but if there are clearer signs that the economy is slowing down, the central bank may further relax its policy as early as September.