TOKYO (Reuters) - Japan’s core machinery orders are expected to have fallen for a second straight month in August, a Reuters poll showed on Friday, suggesting weak global demand might force firms to slash investment - one of the few bright spots in a slowing economy.
Core machinery orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine month, likely fell 2.5% in August from the previous month, the poll of 17 economists showed. In July, orders contracted 6.6%.
From a year earlier, core orders, which exclude those for ships and electric utilities, are forecast to have dropped 10.8% last month after it rose 0.3% in July.
“Worsening exports and factory output made manufacturers cautious about capital spending, while non-manufacturers’ spending on labor-saving investment remained solid,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
Capital expenditure has been among the few bright spots in Japan’s economy as non-manufacturers continue to invest heavily on automation to cope with a tight labor market, offsetting the weakness in manufacturers’ spending.
A Bank of Japan Tankan survey released on Tuesday showed that despite waning business confidence big firms plan to raise their capital expenditure by 6.6% in the financial year that ends March 2020, versus economists’ median estimate of a 7.0% increase.
The Cabinet Office will publish the machinery orders data at 8:50 a.m. on Oct. 10 Tokyo time (2350 GMT Oct. 9).
The poll also forecast Japan’s household spending to have risen 1.2% in August from a year earlier, accelerating from a 0.8% gain in July.
“Some of the last-minute buying ahead of a sales tax hike seem to have helped. We expect consumer spending will grow ahead,” said Kenta Maruyama, economist at Mitsubishi UFJ Research and Consulting.
Japan rolled out a twice-delayed increase in the sales tax to 10% from 8% on Tuesday, a move that is seen as critical for fixing the country’s tattered finances. But there are fears the higher tax could hurt consumer spending and tip the economy into recession.
The internal affairs ministry will announce household spending data at 8:30 a.m. Japan time on Oct. 8 (2330 GMT, Oct. 7).
The nation’s current account to expected to show a surplus of 2.07 trillion yen ($19.4 billion) in August, partly helped by gains in income from investments overseas, the poll found.
The finance ministry will publish the current account balance at 8:50 a.m. on Oct. 8.
The Bank of Japan’s corporate goods price index (CGPI), which measures the prices companies charge each other for goods and services, was seen down 1.2% in September from a year earlier, declining for fourth straight month due to price falls in oil and coal related products.
The central bank will release the data at 8:50 a.m. on Oct. 10.
Reporting by Kaori Kaneko; Editing by Shri Navaratnam