Japan's core machinery orders likely fell in June: Reuters poll

FILE PHOTO - People work next to heavy machineries at a construction site in Tokyo, Japan, March 13, 2016. REUTERS/Yuya Shino

TOKYO (Reuters) - Japan’s core machinery orders likely fell for the second straight month in June, a Reuters poll showed on Friday, adding to growing signs that intensifying U.S.-China trade tensions are taking a toll on the export-reliant economy.

Robust capital expenditure and private consumption offset the pain from the global slowdown on exports, helping Japan’s economy expand an annualized 1.8% in April-June.

But the 16 economists polled by Reuters expect core machinery orders, a leading indicator of capital expenditure, to have dropped 1.3% in June from the previous month.

The decline would follow a 7.8% slump in May, which was the biggest decline in eight months, and cast doubt on the government’s view that robust corporate spending will underpin Japan’s recovery.

“Exports and output are weak. Uncertainty over U.S.-China trade frictions is also high, so manufacturers in particular could become cautious of spending,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

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 July from a year earlier, the Reuters poll showed.

Reporting by Leika Kihara