Japan core machinery orders record fall

Japan's core machinery orders unexpectedly declined in May, the sharpest fall since the government started to compile data in the current format in 2005, casting doubts on hopes that capital spending was rising and could boost further economic recovery. Core orders slumped 19.5% from the previous month, against economists expectations for the key gauge of capex to inch higher 0.9%. On an annual basis orders, which exclude ships and electric power utilities, dropped 14.3% in May, shy of expectations for a 9.5% gain. Cabinet Office said that there were special factors behind the decline in demand for machinery items in may, highlighting that there were no indication of companies blaming the sales tax hike, which was implemented on April 1. In April, core machinery orders declined 9.1% after rising a record 19.1% in March before the tax increase. It is estimated that orders will fall in the second quarter from the previous three-month period, but it will likely be temporary with a pickup from July projected.

Separately, another report showed tertiary industry index rose a seasonally adjusted 0.9% on month in May. Industries that enjoyed an increase in activity included retail sales, transportation, real estate and utilities, while scientific research and financial services saw activity slowing.