TOKYO (Xinhua) – Japan’s core private-sector machinery orders dropped in July from a month earlier, the government said in a report yesterday, owing to non-manufacturing orders surging the previous month on robust demand from the transport industry.
According to the Cabinet Office, the orders, excluding those for ships and utilities because of their volatility, fell 6.6 per cent in July from the previous month.
The orders totalled CNY896.9 billion (USD8.3 billion) in the recording month, the government’s data showed.
The drop in core orders in the recording period comes on the heels of a 13.9 pe rcent increase booked a month earlier, as the office’s data showed orders for railway cars from the transport sector in the recording period came with some serious price tags, marking the largest increase since comparable data became available in 2005.
The Cabinet Office maintained its assessment that the orders are showing “signs of picking up,” even though the latest reading had shown a downturn.
Orders from manufacturers rose 5.4 per cent to CNY384.1 billion (USD3.55 billion), the Cabinet Office said, with orders from nonferrous metals and shipbuilding sectors being particularly weighty in the recording period.
Those from non-manufacturers, however, excluding ships and electric utilities, dropped 15.6 percent to CNY518.9 billion (USD4.80 billion) owing to hefty downward contributions from transport and postal industries, the office said.
Overseas orders, which act as a barometer of future exporters, fell 6.0 per cent to CNY804.1 billion (USD7.44 billion), the government’s data showed.
Total orders, including those in the public sector, edged up 0.1 per cent to CNY2.36 trillion (USD21.86 billion) in the recording period, the Cabinet Office said in its latest report.
Machinery orders are a key advance indicator for corporate capital spending and the government uses the data to predict the strength of business spending in a six to nine month period ahead.
A rise in capital expenditure here can boost the economy as Japanese companies are producing more machinery to meet rising demands from overseas markets.
Such business investment accounts for roughly 15 per cent of Japan’s gross domestic product.