Japan’s machinery orders fall, overshadowing investment rebound prospects

The Japanese economy goes back into crisis

The Japanese economy goes back into crisis.

Japan’s basic machinery orders fell for the first time in three months in September and at a faster-than-expected pace, denting hopes that a rapid rebound in business spending could help the economy experience a rapid recovery. of the coronavirus crisis.

The decline in orders for basic machinery underscored the reluctance of Japanese companies to commit to more capital investments, as the resurgence of COVID-19 infections has clouded the outlook for global demand.

Basic machinery orders, a highly volatile data set that is considered a good barometer of investments for the next six to nine months, fell 4.4% in September after rising 0.2% in the previous month. .

The drop, which marked the first decline since June, was much larger than the 0.7% contraction expected by economists in a Reuters poll.

“Production and exports are recovering at a rapid pace, so business profits are likely to improve quite quickly as well,” said Hideo Kumano, chief executive economist at Dai-ichi Life (T: 8750) Research Institute. .

“But with such a big drop in production in the second quarter, companies are still cautious about capital expenditures.”

Compared to the previous year, orders for basic machinery, which exclude ships and electricity, plummeted 11.5% in September, almost exactly equal to the 11.6% decline that economists expected.

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