Japan’s core machinery orders, which exclude ships and electric power companies, fell by 1.9% month-over-month to 858.1 billion yen in August 2024, performing worse than market expectations of a 0.1% decline. This marks the fifth drop in core orders this year, reflecting ongoing challenges in Japan’s economic environment.

Manufacturing Sector Weakness

The manufacturing sector experienced a 2.5% decline in orders, reaching 388.4 billion yen. Several key industries saw significant drops, including:

• Other transport equipment: Down 38%
• Information and communication electronics: Down 28.4%
• Non-ferrous metals: Down 23.4%

These figures indicate a broader slowdown in Japan’s industrial output, particularly in sectors that heavily depend on capital investment.

Non-Manufacturing Sector Struggles

The non-manufacturing sector also recorded a substantial decline, with orders falling by 7.7% to 446.9 billion yen. Among the hardest-hit industries were:

• Transportation and postal activities: Down 34.4%
• Wholesale and retail trade: Down 23.6%
• Finance and insurance: Down 15.6%

These sharp declines highlight the broader economic impact on services-related sectors, particularly those linked to logistics and trade.

Year-on-Year Reversal

On an annual basis, private-sector machinery orders reversed from an 8.7% increase in July to a 3.4% decline in August. This dramatic shift underscores the volatility and uncertain outlook for Japan’s economy, as global demand and domestic investment remain inconsistent.

Conclusion

Japan’s machinery orders for August 2024 indicate mounting challenges across both the manufacturing and non-manufacturing sectors, with widespread declines in key industries. The sharper-than-expected drop suggests that businesses are exercising caution in capital investments amid ongoing economic uncertainties.