Machinery orders in Japan sink 2-year low as earthquake shakes manufacturing hub

Orders for machines tumbled in April in Japan, sinking to two-year's lowest figure owing to a natural disaster that hit the southern suburbs of country's manufacturing hub. A massive earthquake had hit the area of Kumamoto on April 16 that had shaken the economy to its core.

Core machinery orders fell 11 percent m/m, wider than the median estimate of 2.3 percent decline, as per a poll conducted by Reuters. It also marked the biggest decline since May 2014. In March, core orders had risen 5.5 percent.

"This is a result of the Kumamoto earthquakes, but China's economic slowdown is also having a negative impact," said Daiju Aoki, Economist, UBS Securities.

Moreover, any further delays in the capital expenditure will raise pressure on Prime Minister Shinzo Abe’s government to announce more economic stimulus soon, in an attempt to boost the largely disappointing economic campaign.

Meanwhile, capex fell in the first quarter and is expected to post further losses in the second quarter, which is also likely to continue in to the next, affecting government’s stimuli and monetary easing, according to analysts’ projections.