Power Shortages Cut Into Japan’s Machinery Orders

Disruption to power supplies is one of Japan’s largest hindrances in their recovery from the earthquake and tsunami. As a result, core machinery orders in Japan fell by 3.3% in April, compared with the previous month, the latest data from the cabinet office shows, according to BBC News.

Analysts said the data showed that the recovery in Japan remains volatile in the wake of power shortages. Machinery orders are a key indicator of companies’ capital spending and expansion plans.

“We have power shortage issues which are going to stay for a long time,” said Yuuki Sakurai of Fukoku Capital Management.

Sakurai said that even if companies were to buy new machinery, they would not be able to utilize it fully because of power supply problems — so they may use their capital in other areas.

He added that as the summer season reaches its peak, things are likely to get worse. “If they are trying to save power, we may even grow at a lower-than-expected rate,” he said. “This is not a steady recovery.” ◆