Japan's core private-sector machinery orders plunged by a record 19.5 percent in May, the government said Thursday, signaling the first consumption tax hike in 17 years on April 1 has blurred the economic outlook, discouraging companies from beefing up investment.
The orders, excluding those for ships as well as from utilities because of their volatility, fell following a seasonally adjusted 9.1 percent drop in April, after soaring 19.1 percent in March, the fastest growth since comparable data became available in April 2005, the Cabinet Office said.
The value of the orders, widely regarded as a leading indicator of capital spending, slid to 685.3 billion yen, the smallest since January 2013, prompting the government to downgrade its basic assessment of the orders.
The office said the orders are at a "standstill in their growth trend," after saying last month they are "on a growth trend."
Prime Minister Shinzo Abe's government sees business investment as a pillar of economic growth. The plummet in machinery orders is likely to put a damper on optimism that a robust corporate sector can help ease the negative impact on the economy of the 3-percentage-point tax hike to 8 percent, analysts said.
Recommended Content
Editors’ Picks
EUR/USD retreats to 1.0750, eyes on Fedspeak
EUR/USD stays under modest bearish pressure and trades at around 1.0750 on Wednesday. Hawkish comments from Fed officials help the US Dollar stay resilient and don't allow the pair to stage a rebound.
GBP/USD struggles to hold above 1.2500 ahead of Thursday's BoE event
GBP/USD stays on the back foot and trades in negative territory below 1.2500 after losing nearly 0.5% on Tuesday. The renewed US Dollar strength on hawkish Fed comments weighs on the pair as market focus shifts to the BoE's policy announcements on Thursday.
Gold fluctuates in narrow range above $2,300
Gold struggles to make a decisive move in either direction and moves sideways in a narrow channel above $2,300. The benchmark 10-year US Treasury bond yield clings to modest gains near 4.5% and limits XAU/USD's upside.
SEC vs. Ripple lawsuit sees redacted filing go public, XRP dips to $0.51
Ripple (XRP) dipped to $0.51 low on Wednesday, erasing its gains from earlier this week. The Securities and Exchange Commission (SEC) filing is now public, in its redacted version.
Softer growth, cooler inflation and rate cuts remain on the horizon
Economic growth in the US appears to be in solid shape. Although real GDP growth came in well below consensus expectations, the headline miss was mostly the result of larger-than-anticipated drags from trade and inventories.