TOKYO • Japan's machinery orders were expected to fall in May after April's huge gains, a Reuters poll showed yesterday, with analysts on the lookout for signs of United States-China trade frictions affecting machinery sales.
US tariffs on US$34 billion (S$46 billion) in Chinese imports took effect yesterday, with Beijing having vowed to respond immediately, potentially putting the world's two biggest economies on a risky path towards a full-scale trade war.
Core machinery orders, a volatile data series regarded as an indicator of capital spending in the coming six to nine months, were seen to be down 5.5 per cent in May following a 10.1 per cent jump in April, the poll of 17 analysts showed.
Compared with a year earlier, core machinery orders, which exclude those for ships and from electric power utilities, likely rose 8.6 per cent in May after rising 9.6 per cent in April.
"Firms' willingness to undertake capital spending is solid, especially investment in streamlining and labour saving. So we expect machinery orders will grow moderately," said Mr Yosuke Yasui, a senior economist at the Japan Research Institute.
The Cabinet Office will issue the machinery orders data on July 11 .
Solid capital spending plans were a bright spot in last week's downbeat Bank of Japan business confidence survey, which showed that big manufacturers' sentiment had worsened for a second straight quarter in the three months to June.
The Reuters poll showed Japan was expected to post a current account surplus of 1.24 trillion yen (S$15.3 billion) in May, down from a 1.845 trillion yen surplus in April, due to a trade deficit and reduced gains in income from overseas investments. The Finance Ministry will announce the current account data on Monday.
The Bank of Japan's corporate goods price index (CGPI), which measures the prices companies charge each other for goods and services, was expected to rise 2.8 per cent last month from 2.7 per cent in May. Higher prices for electricity, coal and oil products and city gas were seen boosting the CGPI, which is due on July 11.