Japan’s machinery orders rebound in May after virus-linked slump

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TOKYO, July 9 (Xinhua) — Japan’s core private-sector machinery orders rose in May owing to an increase in those from non-manufacturers despite the state of emergency over the coronavirus pandemic earlier, the government said in a report on Thursday.

According to the Cabinet Office, the orders, excluding those for ships and utilities because of their volatility, increased 1.7 percent in May from the previous month, with total orders amounting to 765.03 billion yen (7.13 billion U.S. dollars), marking the first rise in three months.

The Cabinet Office, however, maintained its assessment that machinery orders are “weakening.”

The core orders in May came on the heels of a 12.0 percent nosedive booked in April as the state of emergency being issued requested both social and business restrictions be adhered to amid the virus outbreak.

Orders from manufacturers plummeted 15.5 percent in the recording period to 282.39 billion yen (2.63 billion U.S. dollars), dropping for a fourth straight month, the Cabinet Office’s data showed.

Those from non-manufacturers, excluding those for ships and from electricity utilities, however, surged 17.7 percent to 478.26 billion yen (4.46 billion U.S. dollars), the office said.

Orders from overseas, seen as an indicator of future exports, fell by 18.5 percent to 561.59 billion yen (5.23 billion U.S. dollars), the government’s data showed.

Total orders dropped 11.0 percent in the recording period to 1.87 trillion yen (17.44 billion U.S. dollars), the office said.

Machinery orders are a key advance indicator for corporate capital spending and the government uses this key data to predict the strength of business spending in six to nine months.

A rise in capital expenditure here can boost the economy as Japanese companies are producing more machinery to meet rising demands from overseas markets. A drop in such expenditure can have a reverse effect.

Such business investment accounts for roughly 15 percent of Japan’s GDP.

Types of machinery included in the monthly government survey comprise engines and turbines, heavy electrical machinery, electronic and communication equipment, industrial machinery, machine tools, railway rolling stock, road vehicles, aircraft, ships, watercraft, as well as subtypes in those categories. Enditem

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