Japan's machinery orders post biggest fall in 6 months in blow to corp spending

TOKYO : Japan's machinery orders posted their biggest single-month fall in six months in August as pressure from a global economic slowdown and a weaker yen that pushes up import costs darken the outlook for corporate spending.

The Reuters Tankan survey separately showed that business confidence at big manufacturers fell to a five-month low, as a double whammy of inflation and slowing global growth hurt the trade-reliant economy.

Core orders, a highly volatile data series regarded as barometer of capital expenditure in the coming six to nine months, fell 5.8 per cent in August from the previous month, Cabinet Office data showed.

That marked the sharpest month-on-month decline since a 9.8 per cent drop in February and was weaker than the median forecast of a 2.3 per cent fall by economists in a Reuters poll.

Compared with a year earlier, core orders, which exclude volatile numbers from shipping and electric utilities, rose 9.7 per cent in August, the data found.

By sector, orders from manufacturers advanced 10.2 per cent from the previous month, lifted by a large-size order for a nuclear motor in the non-ferrous metals sub-sector, while orders from the non-manufacturers shrank 21.4 per cent.

In the Reuters Tankan survey, the manufacturers' sentiment index slipped to 5 in October from 10 last month as monetary tightening around the world and the yen's recent decline to a 24-year low against the dollar hurt corporate sentiment.

The world's third-largest economy has managed to expand at a relatively strong pace so far this year, growing an annualised 3.5 per cent in the second quarter as private spending picked up after the government lifted local COVID-19 restrictions.

But it faces risks from an economic slowdown in Asia and the United States, which is clouding the prospects for a stronger recovery and making companies and consumers more cautious at home.