Japan Dec machinery orders to slip, COVID-19 remains a risk

TOKYO: Japan's core machinery orders likely fell in December for the first time in three months, a Reuters poll showed on Friday, and renewed restrictions to curb coronavirus infections could prompt firms to rein in capital spending further.

Next week's key data includes exports, which likely grew modestly for a second straight month in January, while core consumer inflation was seen falling for a sixth straight month, the poll found.

Core machinery orders, widely considered an indicator of capital spending for the next six to nine months, is forecast to have fallen 6.2% in December from the previous month, the poll of 19 economists showed.

The highly volatile data, expected to show core orders, excluding those for ships and electrical utilities, was seen down 3.0% in December from a year earlier.

In January, Japan rolled out the state of emergency in Tokyo and some other areas, which is expected to slam the economy.

"Firms may strengthen their cautious stance on capital spending due to the renewed emergency statue," said Shumpei Fujita, an economist at Mitsubishi UFJ Research and Consulting.

"There is a downside risk to machinery orders."

The poll found exports grew 6.6% in January from a year earlier, after a 2.0% increase in December, helped by a pickup in the global economy.

Imports are projected to have declined 6.0% in January from a year earlier, which would result in a trade deficit of 600 billion yen ($5.72 billion).

The government will release core machinery order and trade data at 8:50 a.m. Japan time on Feb. 17, Wednesday (2350 GMT on Tuesday).

The core consumer price index (CPI), which includes oil products but excludes volatile fresh food prices, is forecast to have slipped 0.7% in January from a year earlier weighed by a fall in energy-related costs. Core CPI data is due on Friday.