Disappointing Data Releases From Japan Point to Signs of Strain in the Economy

Disappointing Data Releases From Japan Point to Signs of Strain in the Economy

Posted Wednesday, February 19, 2020 by
Arslan Butt • 1 min read

Machine orders in Japan fell for the 14th consecutive month, witnessing the fastest pace of decline in more than a year as a result of mounting fears about the coronavirus outbreak. According to recent data released by the government, machine orders declined by 12.5% MoM during December, coming in worse than economists’ expectations which were for a 9.0% decline instead.

In more troubling news for the Japanese economy, exports witnessed a 2.6% decline YoY in January after a 6.3% decline in the previous month. However, economists has forecast a 6.9% decline in exports, possibly because of the effects of the coronavirus outbreak.

Although highly volatile, machine orders data provides insight into companies’ capital spending plans over the next six to nine months. The weakness in these two figures released today reviews that the Japanese economy is expected to continue remaining under pressure over weakness in both domestic demand as well as due to external risks such as that of the virus.

Earlier this year market for beginning to turn hopeful that the receiving trade tensions would help the world’s third biggest economy post recovery in 2020. However the recent outbreak of the coronavirus puts Japan’s export-oriented economy under strain all over again, as it is likely to impact manufacturing, trade, tourism and several other sectors of the economy in the near future.

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