- BoJ Deputy Governor Kikuo Iwata
The latest data regarding core machinery orders for the month of July released by the Cabinet Offices showed a slower increase of 3.5% in private-sector machinery orders, compared to the 8.8% growth in June, trailing from the forecasters' predictions of orders rising 4.1%. Yet compared to July of last year, the orders have risen by 1.1%, rebounding from the slide of 3% in June 2013. The total value of private sector orders for machinery climbed to 771.7 billion yen, yet this figure excludes volatile orders such as ships and orders from electric power companies. The total number of orders, including volatile orders added to 2,201.3 billion yen, a sharp plunge of 13.5% on month, yet it still managed to gain 6.1% on year. The 5.3% drop in monthly growth compared to July might also negatively influence the BSI Manufacturing Index, released Thursday and Revised Industrial Production Index, released on Friday. In addition, the Bank of Japan data showed PPI unexpectedly decreased 0.2%, after having gained steadily for the last five months. However, in annual context, CGPI still shows a positive trend of 3.9%. CGPI is one of indicators of the future tendencies of inflation. The biggest contributors to the slump in the index were petroleum and coal products, whose prices dropped by 1.1 %. While this slide in energy prices might positively affect businesses and consumers; it poses difficulties for the BoJ which has been rooting for rising consumer price inflation in light of its Abenomics policies.
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