Japan’s Core Machinery Orders Down After Rising For Four Months

Arslan Butt•Monday, March 15, 2021•1 min read

Core machinery orders across Japan bucked a four-month trend and declined on a monthly basis during January on account of the fresh restrictions that were imposed to curb the latest wave of the coronavirus pandemic. Data put out by the Cabinet Office reveals that core machinery orders contracted by 4.5% MoM in January; however it was better than the economists’ forecast which was for a decline of 5.5% instead.

Manufacturing firms’ orders declined by 4.2% MoM while the services sector took a bigger hit, falling 8.9% lower. Core machinery orders, a highly volatile data series and a key indicator of firms’ capital spending plans over the coming six to nine months, declined for the first time in four months as the Japanese government imposed COVID-19 restrictions, hitting the services sector especially hard.

On a positive note, meanwhile, external orders increased for the fourth consecutive month by 6.4%. Core orders increased by 1.5% in January on a yearly basis, going against economists’ expectations for a decline by 0.2% instead.

Japan’s economy is expected to have gone into contraction mode at the beginning of this year after showing some signs of recovery during late 2020. Even as the economy looks poised to recover as external demand rises, the possibility of US-China tensions reemerging could also cloud the outlook for the world’s third largest economy in the coming months.

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Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.