Japan’s April core machinery orders post unexpected double-digit growth

JAPAN’S core machinery orders surged unexpectedly in April, government data showed on Wednesday, as business spending remained robust despite uncertainties such as higher energy prices and China’s Covid-19 lockdowns.

The rise in the closely watched barometer of business investment bodes well for Japan’s corporate sector and the broader economy, which faces global inflation and the yen’s rapid decline to 24-year-lows.

Core machinery orders, a highly volatile data series considered an early indicator of capital expenditure in coming two to three quarters, grew 10.8 per cent in April from the previous month, the Cabinet Office data showed.

It was far stronger than economists’ median forecast of a 1.5 per cent dip and followed a 7.1 per cent jump in March.

Orders from manufacturers rose 10.3 per cent, while those from service-sector firms advanced 8.9 per cent, according to the month-on-month data.

Compared with a year earlier, core orders, which exclude volatile numbers from shipping and electric power utilities, gained 19.0 per cent in April, the data showed.

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The government upgraded its assessment of machinery orders, saying they appeared to be picking up.

The world’s third-largest economy contracted an annualised 0.5 per cent in January-March quarter as coronavirus curbs kept private consumption stagnant.

Analysts have cited supply chain disruptions among the downside risks to Japan’s rebound in the current quarter. REUTERS