TOKYO- Japan’s machinery orders unexpectedly fell in September in a sign the global economic slowdown and higher import costs are weighing on firms’ capital spending plans.
Core orders, a highly volatile data series regarded as a barometer of capital expenditure in the coming six to nine months, fell 4.6 percent in September from the previous month, Cabinet Office data showed.
That followed a 5.8 percent drop in August and was weaker than the median forecast of a 0.7 percent gain by economists in a Reuters poll.
Compared with a year earlier, core orders, which exclude volatile numbers from shipping and electric utilities, grew 2.9 percent in September, the data found.
Manufacturers surveyed by the Cabinet Office are expecting core orders to rise 3.6 percent in October-December, after a 1.6 percent drop in the previous quarter.
The government downgraded its view on machinery orders for the first time since February, saying the recovery is stalling.
Previously, the government said there were signs the economy was picking up.
“Considering manufacturers’ forecasts for October-December, and their solid corporate profits, their capital spending is expected to pick up as a trend,” said Takumi Tsunoda, chief economist at Shinkin Central Bank Research Institute.
He also said firms are expected to gradually carry out their investment plans, many of which were delayed due to supply chain disruptions, although risks still lie ahead.
“The outlook for the economy is uncertain due to risks such as the global economic slowdown and higher energy costs, which could cool down corporate sentiment, especially that of small firms, for investment,” he added.
By sector, orders from manufacturers slumped 8.5 percent in September from the previous month, dragged down by non-ferrous metals, while orders from the non-manufacturers grew 4.4 percent, led by information services and telecommunications industries, according to the data.
The machinery orders data comes a day after figures showed Japan’s economy unexpectedly shrank in the third quarter.
To ease the economic blow from rising raw material costs, the government last month compiled a stimulus package with 29 trillion yen ($208.66 billion) in extra spending.
Japan’s current account suffered the biggest year-on-year decline in the first half of this fiscal year since the 2008 global financial crisis, as the trade balance fell into deficit due to a weakening yen and rising global commodity prices.
In the April-September period, the current account surplus more than halved from a year earlier, falling 58.6% to 4.8458 trillion yen ($33.36 billion), data from the Ministry of Finance showed on Wednesday.
That was the biggest fall since the second half of fiscal 2008 and the second-largest since comparable data became available in 1985.
The current account surplus fell to a level last seen in 2014 when rising oil prices tipped Japan’s trade balance into the red, the data showed.
Japan’s current account surplus has long been regarded as a sign of export might and a source of confidence in the safe-haven yen, but the account has occasionally fallen into deficit on a monthly basis in recent years.
For the month of September, Japan’s current account surplus stood at 909.3 billion yen, above economists’ median forecast for a surplus of 234.5 billion yen in a Reuters poll.
While a weakening yen makes imports more expensive, it also makes exports cheaper for foreign buyers. But the boost to exports from a weaker yen will likely be more limited than expected as firms have shifted their production abroad over the past three decades.
