According to data released by the Cabinet Office, core machinery orders in Japan declined for the third consecutive month during September. Core machinery orders declined by 2.9% in September and by 3.5% in Q3 2019. Economists were expecting a 0.9% increase in this figure instead.

Japan’s export-oriented economy has been suffering on account of the prolonged US-China trade war, driving down capital spending among manufacturers as orders from China slide lower. Amid the global economic slowdown and trade tensions, the economic growth in Japan remained supported by strong domestic demand and capital spending so far. However, the steep decline in core machinery orders spells trouble for the economic growth as it is a key indicator of capital spending among manufacturers.

Japan is due to release its GDP figures later this week, and economists are expecting the GDP to have slowed down to +0.8% in Q3 from +1.3% in Q2 2019. On the release of this news, the Japanese yen has failed to show any reaction so far. At the time of writing, USD/JPY is trading somewhat steady around 109.14.