TOKYO (Reuters) - Japan’s machine tool orders in April fell to their lowest level in more than a decade, preliminary data showed on Thursday, in a sign the coronavirus pandemic is taking an deeper toll on the economy.
The data is the latest in a string of grim figures that are reinforcing views that the world’s third-largest economy is sliding into a deep recession.
Machine tool orders in April slumped 48.3% compared with a year earlier, a preliminary estimate from the Japan Machine Tool Builders’ Association (JMTBA) showed.
Total orders, regarded as a leading indicator on spending on factory equipment, hit their lowest level since January 2010, a JMTBA spokesman told Reuters
They were especially dragged down by domestic demand, which fell 51.4% from a year earlier to the lowest in more than seven years.
Compared with a month earlier, orders dropped 27.5%.
“Of course, there was a big decline, and it confirmed that companies are foregoing capital expenditure,” said Atsushi Takeda, chief economist at Itochu Economic Research Institute.
But Takeda added that the fact that orders didn’t collapse even more sharply also showed that country’s factories remained active despite a nationwide state of emergency declared a month ago.
“It shows the lockdown didn’t stop economic activity as a whole in Japan, but is centred on the services sector,” Takeda said.
Japan’s economy likely shrank for a second straight quarter in the first three months of this year, a Reuters poll showed, meeting the technical definition of recession. Many analysts believe it will contract at even sharper rate in the current quarter.
Prime Minister Shinzo Abe is expected to lift the state of emergency across a large part of the country later on Thursday.
Reporting by Daniel Leussink; Editing by Kim Coghill