Japan machinery orders down for first time in 2 months

Japan's core machinery orders fell a seasonally adjusted 2.7 percent in June from the previous month to JPY 777.4 billion (USD 8.5 billion) for the first decline in two months, as non-manufacturers were reluctant to make fresh capital investment, the government said Tuesday. The drop follows a 10.5 expansion in May, according to data released by the Cabinet Office. Core private-sector orders, which exclude volatile demand from electric utilities and for ships, are considered a key indicator of corporate capital spending in the next three to six months. By industry, orders by manufacturers increased 2.4 percent month-on-month in June, while those from non-manufacturers plunged 17.5 percent. Overseas demand, an indicator of future Japanese exports, lost 16.7 percent. For the April-June quarter, machinery orders gained 6.8 percent JPY 2.3 trillion (USD 23.1 billion), up at the sharpest pace since the July-September period in 2008, before the global economy was hit by the 2008 Lehman Brothers collapse. Despite worsening data for June, the Cabinet Office upgraded its basic assessment for the first time since December, saying, "The machinery orders have been picking up moderately." It said last month the orders have been showing signs of moderately picking up." Looking ahead, core orders are expected to fall 5.3 percent in the July-September quarter, it further said.