MNI 5 THINGS: Japan May Core Machine Orders Dip But Picking Up

--Japan May Core Machine Orders -3.7% M/M; MNI Median -5.5% 

--Japan May Core Machine Orders Post 1st M/M Drop in 2 Months 

--Japan Govt Keeps View: Machine Orders Picking Up

     TOKYO (MNI) - Japan's core machinery orders, which exclude volatile orders

for power generation equipment and ships, posted only a small 3.7% drop on month

in May, the first drop in two months after a sharp 10.1% rise in April,

indicating capital investment remains solid, data from the Cabinet Office

released Wednesday showed.

     The key points from the latest machinery orders data:

     * The core order decrease was smaller than the MNI survey median economist

forecast for a 5.5% drop (forecast range: from -2.0% to -7.5%). April-June core

orders are expected to post the fourth straight quarter-on-quarter rise. If the

June figure is +5.3% m/m, Q2 orders would be +7.1%, as officially forecast. Even

if there is no growth in June, Q2 would show a 5.3% gain.

     * The three-month moving average of core orders indicates a modest uptrend

in business investment. The moving average rose 0.6% in May from the previous

three-month period, marking the fifth straight rise.

     * "We judged that the recent pickup trend was intact because the moving

average continued to rise and the drop in May core orders was small," a Cabined

Office official said. "Machinery orders are supported by strong demand for

investing in equipment aimed at easing labor shortages."

     * The Cabinet Office left its assessment unchanged from the previous month,

saying, "Machinery orders are picking up." Last month it upgraded its view for

the first time since August 2017. Previously, it had said orders were "showing

signs of a pickup."

     * Orders from the manufacturing sector rose 1.3% on month in May for the

second straight rise but the pace slowed sharply from +22.7% in April, while

orders from the non-manufacturing sector excluding those for power generation

and ships edged up 0.2% on month for the fifth straight rise after +0.4% in

April. Core orders fell because the upward pressure from seasonal adjustments

for those orders was weaker than that from adjustments for overall orders, a

Cabinet Office official said.

--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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