Procurement of major equipment in Japan fell by 20% in May

The procurement of major equipment in Japan unexpectedly fell in May, bringing heavy decline reported a month earlier. The negative signals proved to be another challenge for the government after the increase of the tax on consumption from the beginning of April. The procurement of equipment, excluding ships and household goods, fell by 19.5% on a monthly basis in the fifth month, showed the latest data from the Japan Statistical Office. Level off significantly with the expected market expansion of 0.9%. The estimates of the Japanese authorities, presented with the data for May showed an expected growth rate of only 0.4% in April-June.

From April 1st, led by Shinzo Abe government of Japan raise consumption tax from 5% to 8%, forcing producers to increase capital expenditure before April to meet prior to the rise of the levy advanced search. According to many experts rate adjustment could jeopardize Japan’s economic growth at a time when the government Abe desperately trying to pull the country’s 15-year-old severe deflationary spiral.

Some recent data still showed the economy of the island is likely to withstand heavy pressure. Retail sales returned to growth, rising by 4.6% mom in May, while investment intentions in the manufacturing sector show that they are still strong. The production measure Tankan, used by the central bank in setting monetary policy, showed that manufacturers expect growth of capital spending by 12.7% on-year in fiscal 2014