Alroy Commentary – Japan machinery orders back to pre-financial crisis level
Japan second quarter machinery orders surprised investors by rising 6.8%, the core machinery orders reached their pre-financial crisis level. In general, machinery orders are a leading indicator of capital investment, and strong data shows companies firmly prepare to invest more. Form Japanese government report, orders for train cars, semiconductor-making equipment and computers led the indicator to rise, and strong second quarter machinery orders showed a shinier future of the recovery since companies gear up to maintain or even expand operations in Japan.
Even though Japan is on the track of recovery, there are some concerns in short-term. Investors concern whether Abe’s government raise nation’s sales tax and further influence most. In addition to interior concern, there is the uncertainty about china’s slowing growth and weak demand overseas. Japanese government forecast a 5.3% drop in machinery orders in third quarter based on a survey of 280 companies, due to weak oversea demand.
Japan machinery orders are gradually improve, although it is widely believe it will drop in third quarter. Since there are a lot of uncertainties about exterior economies, especially China and USA, the recovery seems relatively weak and hesitant. But in long term, we regard Japan market is positive to grow.
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