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Weakening Core Machine Orders Points To Slower CAPEX

JAPAN DATA

Japan's July core machine orders came in a touch below expectations. In m/m terms we printed at -1.1%, versus -0.8% projected and +2.7% in June. In y/y terms we were at -13.0%, versus -10.3% forecast and -5.8% prior.

  • This continues the downtrend in core machine orders in y/y terms, albeit with a volatile trend since the start of the year. The y/y pace is now the lowest going back to Q3 2020.
  • The chart below overlays core machine orders y/y (the white line) against capital spending (ex software), also in y/y terms. It suggests a further slowdown in capex as we progress through H2.
  • Later on, we get the final July Japan IP data, along with capacity utilization.

Fig 1: Softening Core Machine Orders Suggests Weaker Capex Growth

Source: MNI - Market News/Bloomberg

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