Japan Investment


Machinery orders expand most in over 10 years

Core machinery orders, a leading indicator of capital spending over a three to six-month period, improved markedly in March, expanding at the fastest pace since January 2003. Headline machinery orders (private sector, excluding volatile orders) soared a seasonally adjusted 14.2% over the previous month, following the 4.2% rise tallied in February (previously reported: +7.5% year-on-year). In addition, the print was well above the 3.5% increase expected by market analysts.

Meanwhile, both overall manufacturing orders and non-manufacturing books expanded robustly in March, while machinery orders from overseas, which determine future exports, registered the strongest growth seen in four years.

Compared to the same month last year, core machinery orders rose 2.4% in March, after declining 11.3% in February. Building on the strong annual reading, the trend now points upwards, with annual average growth in core machinery orders rising from minus 3.5% in February to minus 3.0% in March.

Despite the record-high increase, the Cabinet Office maintained its assessment on machinery orders stating that "there are signs of a moderate pick-up". The Office predicts a 1.5% drop in the second quarter, which is below the zero growth recorded in the first three months of the year.

FocusEconomics Consensus Forecast panellists expect investment to rise 0.5% in 2013, which is up 0.1 percentage points over the previous month's projection. In 2014, the panel sees investment expanding 2.7%.

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Japan Investment Chart

Japan Investment March 2013

Note: Month-on-month changes of seasonally adjusted core machinery orders and year-on-year growth rate in %.
Source: Ministry of Economy, Trade and Industry (METI) and FocusEconomics calculations.

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