TOKYO – Japan’s core private-sector machinery orders fell for the first time in four months in May in what could be an early sign that trade tensions between the United States and China are beginning to weigh on demand, government data showed Monday.
The orders, which exclude ships and those placed by electric utilities due to their volatility, declined 7.8 percent from the previous month to total 842.9 billion yen ($7.77 billion).
Despite the fall, the Cabinet Office maintained its assessment that the orders, seen as a leading indicator of capital expenditure, were showing “signs of picking up.”
An official at the office told reporters that it was too early to say whether an ongoing tariff war between the United States and China was hurting sentiment, pointing out that orders had been robust for the past few months.
“The situation will likely change after the talks between U.S. President Donald Trump and Chinese President Xi Jinping at the Group of 20 summit,” she said. The two leaders agreed in a meeting last month to hold off on imposing additional tariffs while they continue negotiations to resolve the stand-off.
Demand from the manufacturing sector dropped 7.4 percent to 370.6 billion yen, pushed down by manufacturers of production machinery and fabricated metal products.
From the nonmanufacturing sector, minus ships and from electric utilities, orders fell 9.0 percent to 471.0 billion yen, with transport and postal services as well as telecommunications making the biggest downward contributions.
Orders from overseas, an indicator of future exports, were down 0.8 percent to 801.5 billion yen.
Total orders, including the domestic public sector and from abroad, fell 6.0 percent to 2.21 trillion yen.