Japan August machinery orders seen falling as coronavirus hits investment: Reuters poll By Reuters

Japan August machinery orders seen falling as coronavirus hits investment:


© Reuters. A worker is pictured next to heavy machinery at a construction site in Tokyo’s business district

TOKYO (Reuters) – Japan’s core machinery orders likely fell in August, a Reuters poll found on Friday, reversing the previous month’s gain as the coronavirus pandemic weighed on business investment.

Worsening earnings have discouraged businesses from investing, with the world third-largest economy only just emerging from its worst post war contraction.

Core machinery orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, likely slipped 1.0% in August from the previous month, the poll of 17 economists showed. The fall would follow a 6.3% gain in July.

From a year earlier, core orders, which exclude those for ships and electrical utilities, are projected to have fallen 15.6% in August following a 16.2% drop in July.

“A rapid deterioration in corporate earnings and uncertainty over the outlook will prompt firms to refrain from carrying out business investment,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

“There may be IT-related investment by firms going ahead, but overall business investment is expected to be weak.”

The Cabinet Office will release the machinery orders data at 8:50 a.m. on Monday, Oct. 12 Tokyo time (2350 GMT Oct. 11).

The Bank of Japan’s corporate goods price index (CGPI), which measures the prices companies charge each other for goods and services, likely fell 0.5% in September from a year earlier, the poll found, reflecting weak domestic demand.

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