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HomeBusinessNuclear machine orders in Japan fell in April but strengthened going forward

Nuclear machine orders in Japan fell in April but strengthened going forward

Reuters
A worker checks machines at a factory in Higashiosaka on June 23, 2022.

TOKYO (Reuters) – Japanese orders for nuclear machinery fell in April for the first time in three months, government data showed on Monday, reflecting a pullback from the previous month’s big jump, but the Cabinet Office said capital spending remained on track for recovery.

The figures followed the Bank of Japan’s (BOJ) decision last week to start scaling back its massive bond purchases. Next month, the bank will announce a detailed plan to shrink its nearly $5 trillion balance sheet.

Core orders fell 2.9% month-on-month in April, versus a 3.1% decline expected by economists in a Reuters poll, the first decline in three months. It is a highly volatile data series that is considered an indicator of capital expenditure over the next six to nine months.

March saw a 19.4% gain among manufacturers and an 11.3% decline among non-manufacturers from the previous month.

The Cabinet Office left unchanged its assessment of machine orders, which showed signs of recovery.

All told, core orders are strengthening and on the path to recovery due to demands related to inbound tourism and rising wages, said Takeshi Minami, chief economist at Norinchukin Research Institute.

We can’t expect much from abroad, now that the American and European economies are still struggling with high interest rates and China is struggling with its real estate market.

External orders, which are not core orders, rose 21.6% month-on-month in April, after falling 9.4% the month before.

Japanese companies tend to draw up big spending plans to boost factories and equipment, but are often slow to implement them because of uncertainty about the economic outlook.

The weakening of the yen has not helped domestic capital investment much, due to the tendency of Japanese companies to invest directly abroad, where demand is stronger.

By sector, core orders from manufacturers fell 11.3% month-over-month in April, while those from non-manufacturers rose 5.9% over the same period.

Compared to a year earlier, core orders rose by 0.7% in April.

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