Japan’s core private-sector machinery orders fell notably by -4.9% mom in November, significantly below expectation of -0.8% mom. This decline marks the first downturn in three months and points to a potential slowdown in business investment. On a year-on-year basis, core machinery orders decreased -4.0% yoy, falling short of the anticipated 0.2% yoy increase.

The Japanese government has maintained its assessment that machinery orders have “stalled” for 13 consecutive months. This continued stagnation in machinery orders is particularly concerning as they are often regarded as a leading indicator of capital spending over the next six to nine months. The implication is that businesses might be exercising caution in their investment decisions, possibly due to uncertainty in the economic outlook or other external factors impacting their spending plans.

Breaking down the orders by sector, manufacturing industry saw substantial reduction in orders, with -7.8% mom drop. Service sector also recorded a slip in orders, down -0.4% mom.

Full Japan machine order release here.

Japanese Prime Minister Shinzo Abe indicated that he could formally announce a month-long state of emergency as soon as on Tuesday. The seven prefectures include Tokyo, Osaka, Kanagawa, Saitama, Chiba, Hyogo and Fukuoka. Though, he insisted that “we are not changing Japan’s policy, but strengthening it and asking for full cooperation.”

“Japan won’t, and doesn’t need, to take lockdown steps like those overseas,” he added. “Trains will be running and supermarkets will be open. The state of emergency will allow us to strengthen current steps to prevent an increase in infections while ensuring that economic activity is sustained as much as possible.”

Additionally, Abe is planning to boost virus testing capacity to 20,000 a day, with increased number of hospital beds and ventilators. There will also be cash handouts of JPY 200m to small and midsize businesses.