Japan machinery orders fall 2.1pc as headwinds hit
Demand for equipment down as Bank of Japan warns of continued slump in global growth
Japan's core machinery orders have fallen more than expected and a central bank policymaker warned of headwinds from soft overseas growth, underscoring the challenges of sustaining an economic recovery generated by Prime Minister Shinzo Abe's stimulus policies.
September's 2.1 per cent fall in core machinery orders, a volatile series regarded as a leading indicator of capital expenditure, exceeded a median market forecast for a 1.4 per cent drop and followed a 5.4 per cent increase in August.
Firms expect orders to fall further in the current quarter, the data showed yesterday, suggesting that business investment remains the weak link in keeping the economy afloat.
Bank of Japan board member Ryuzo Miyao said he expected Japan's economy to sustain a moderate recovery as rising profits prompted firms to gradually increase capital spending.
But he warned of looming uncertainties, such as slack growth in emerging economies and lingering United States fiscal problems that could delay a pickup in global growth.
Companies seem hesitant to boost capital spending due to uncertainty
Sluggish capital spending is a source of concern for Abe, who needs increased business investment to help drive a sustained recovery in the economy after 15 years of deflation.