Japan's machinery orders rebound in February

Japan's machinery orders rebound in February

In February, Japan's machinery orders reported their first monthly soar for four months because of improved demand from the energy as well as telecommunications sectors, although decreasing global conditions are still key challenges for the world's number three economy.

The 1.8% leap month-on-month in core machinery orders, which is a volatile leading gauge of capital expenditure, followed a 5.4% tumble in March.

However, the expansion turned out to be weaker than the median estimate for a 2.5% jump in a Reuters survey of market experts. However, it won’t probably soothe worries that companies could greatly cut business investment because of the US-China trade conflict and soaring inventories of electronic parts.

In February, orders from manufacturers went up by 3.5%, following a 1.9% month-on-month slump in January, as Cabinet Office data revealed on Wednesday.

In February, orders from non-manufacturers headed south by 0.8% month-on-month following January’s 8% dive from the previous month.

Machinery orders from overseas tacked on by 19%, reviving from January’s 18.1% decline.

China and America are attempting to have their differences over trade narrowed, although they’re yet to agree to a new trade deal, which would unwind punitive levies and also restore global trade flows.

The two leading economies have been embroiled in a tit-for-tat tariff conflict since July the previous year that has impacted supply chains.

As a matter of fact, Japanese manufactures rely on selling heavy machinery as well as electronic parts utilized to produce finished goods to Chinese companies.  

Market experts state that uncertainty over trade policy could discourage Japanese businesses from ramping up capital expenditure that will serve as a curb on economic surge.

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Market updates on August 15

The risk sentiment remains under pressure after the comments by China about the countermeasures against the US tariffs. Thus, the AUD/USD and the USD/JPY pairs will be under our attention.

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