MNI 5 THINGS: Japan Mar Machine Orders Dip But on Pickup Trend

--Japan Mar Core Machine Orders -3.9% M/M; MNI Median -2.0% 

--Japan Q2 Core Machine Orders Seen +7.1% Q/Q, 4th Straight Rise

--Japan Q1 Core Orders +3.3% Q/Q Vs Official Forecast -1.5% 

--Govt Keeps View: Machine Orders Show Signs of Pickup

     TOKYO (MNI) - A limited decline in Japanese machinery orders in March led

to the third straight quarterly gain in January-March, indicating business

investment in equipment remains solid, data from the Cabinet Office released

Thursday showed.

     "The drop in core orders in March was in payback for gains in the previous

two months and was not so large. The three-month moving average in March showed

the third rise in a row, supporting our view that machinery orders are showing

signs of a pickup," a Cabinet Office official told MNI.

     "Core orders are expected to post a fourth consecutive quarterly rise in

April-June, reflecting strong demand for industrial and electronic machinery to

cope with labor shortages amid the modest economic recovery."

     The key points from the latest machinery orders data:

     * Core private-sector machinery orders, which exclude volatile orders for

power generation equipment and ships, fell 3.9% on month in March after rising

2.1% in February, posting the first m/m drop in three months. But the

three-month moving average marked the third straight monthly gain, up 2.0% from

the previous three-month period.

     * The decrease was bigger than the MNI survey median forecast for a 2.0%

fall (forecast range: from -6.0% to +0.2%) but it was in reaction to solid gains

of 8.2% in January and 2.1% in February. Five one-off large orders in March

helped limit the decline.

     * Orders from the manufacturing sector fell 17.5% in March for the first

drop in three months after +8.0% in February while those from the

non-manufacturing sector rose 2.2% on month after being unchanged in February.

     * The Cabinet Office maintained its assessment that "machinery orders are

showing signs of a pickup."

     * Core machinery orders are projected by the Cabinet Office to rise 7.1% on

quarter in April-June for a fourth straight quarterly rise following +3.3% in

January-March, which was stronger than the official forecast for a 1.5% drop in

Q1. It would be the longest stretch of increases in Q2 since the one-year period

of gains from Q3 of 2014 until Q2 of 2015.

     * The Cabinet Office's survey showed that Q2 orders will be led by demand

for industrial and electronic machines (including robots, computers and

chip-making equipment) from the manufacturing sector and demand for a category

of engines, boilers and turbines as well as train cars from the

non-manufacturing sector.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com

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