Japan's April machinery orders likely grew m/m; May CGPI may have declined

Japan will release April machinery orders (MoR) and the May domestic corporate goods price index (CGPI) on 10 June. The core MoR likely increased for the second consecutive month in April by 1.2% m/m after rebounding 2.9% m/m in March. Being an indicator of company capex, core MoR tends to move in line with industrial production (IP) and exports. 

IP and exports have recently shown some volatility after signs of a recovery late last year and early this year. Domestic CGPI may have continued to decline by 2.3% y/y in May, dragged down by energy prices on the back of the global oil price decline. Standard Chartered expects, the negative impact of energy prices on CGPI to continue even if global oil prices start to rise, as it will take time for higher oil prices to pass through.