Just when you thought a small silver-lining was appearing in Japan (well no one did really) as Q1 GDP was revised marginally higher, Q2 is off to a disastrous start as Machinery Orders crashed 11% MoM in April (worse than the worst expectation) and the biggest drop since May 2014. Year-over-year that is an 8.2% collapse (a 3 standard deviation miss from expectations of a 1.8% drop) with a more modest 3% slide in Services offset by a 14.8% YoY plunge in manufacturing. So given that start to Q2 - the worst April since 2009 - we suspect Japan is about to go into its 7th recessionary GDP since the crisis.
Non-seaonally adjusted this is an 8.2% drop YoY...
But using the seasonally-adjusted data, April tumbled an even more impressive 8.9% - the worst April since 2009. Suggesting Q2 GDP will not be pretty...
Note - yes, officially a recession in NBER-speak is a 2-quarter drop but in Japan's special case of extreme monetray policy ineffectiveness, we feel comofrtable that any quarterly drop is 'recessionary'.
When asked what he thought, Abe replied "Depends."